Entertainment Law Alerts

August 7th, 2002

European Financing Tightens for Movie and TV Producers

2002 saw the tightening in Europe of rules and regulations governing tax advantaged or structured financing opportunities which had previously existed for US movie and television producers.

United Kingdom restricts sale/leaseback. In the UK, sale/leaseback opportunities are no longer available for television productions; sale/leaseback is only available for feature films. Defining a "feature film", of course, still leaves some room for creativity. Showtime and HBO have occasionally financed films, which have been given a theatrical release, either before or after airing on their channels. If a picture such as "The Last Seduction" starring Linda Fiorentino is shot in the UK and given such a release, can it qualify under the new UK restrictions? Stay tuned.

Germans make it harder to achieve "producer" status. The German government tightened the definition of "producer." To qualify as a producer, a German company now has to be involved with a project preferably before the start of principal photography and certainly by no later than half way through principal photography. Also, at least 80% of production cost now must be spent or firmly committed to be spent by the end of the fiscal year in which the investment is made. Projections are also required in order to demonstrate a reasonable expectation that an investment will be profitable for the investors. These requirements make it much more difficult for US production companies to access financing in Germany, although there are still opportunities for creative financing structures.

For more information, contact Tom Selz at (212) 826-5535 or tselz@fkkslaw.com.