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Ted Hope's avatar

You are right. I will have some additions for you, but still: you are right.

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Roy Price's avatar

Eager to hear.

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John Harvey's avatar

Thanks for sharing this. Very insightful. A couple questions if you don’t mind.

1. How does marketing spend play into this? It seems we still hear that marketing is double the production budget which adds another barrier to profitability. Is that still true generally and is there an opportunity to get the same impact for less?

2. Does your model assume this studio has their own theatrical distribution infrastructure (differentiating it from a production company)?

3. Why hasn’t this been done yet? Debt has gotten more expensive but there is still lots of PE money available that needs to get invested, so is it something beyond just capital?

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Roy Price's avatar

1. Marketing, as a standard ratio to production budget, is assumed in the model.

2. Model assumes we do our own distribution, yes. Just like at Amazon Studios. Otherwise, you are a prodco hoping for a greenlight from your distributor.

3. That’s a good question. It is timely. I suppose that PE’s generally prefer to acquire rather than start anew. VC’s like to start anew, but with very small amounts.

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John Harvey's avatar

Makes sense. On #3, that’s generally true as you say but there are exceptions, like Redbird’s investment in Artist’s Equity, where the bet is based on the talent involved. And PE likes to copycat so if Air has been successful (as it seems to have been for AE at least) I’d guess there would be some interested groups. What would you estimate start-up costs would be for this?

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Roy Price's avatar

That’s true about Redbird. I’d say you’re looking at $240MM until breakeven. Target EBITDA ~$100MM. So a y5 value of $1B to $1.5B (depending on multiple) with optionality around streaming.

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John Harvey's avatar

This is really interesting. Thanks for the conversation!

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Tony Hutchison's avatar

Another interesting read. I don’t live in the US . Not am I remotely religious. But I’m curious why “The Sound of Freedom” attracts the “tag” Faith based? Is this meant as a slight? It seems to be a pretty confronting thriller, that just Ambushed The box office. And knocked Indy 5 from number 1 spot . Which must have pissed a few people , given budget differences.Is this an example of new creative opportunity you allude to?

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Douglas Montgomery's avatar

"One of the important things I am seeing in film now is that the aesthetic is increasingly influenced by games and anime"

spent the whole weekend at Anime Expo, LACC was jammed with coplayers of all ages, hooping and hollaring at everything. Spent the week before at a fuddy duddy OTTX whose comment was "Anime Expo?"

amen brother

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Jon Miles's avatar

I'm in several technical unions, so I'm compelled to ask, does this work better or worse in a non-union world?

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Roy Price's avatar

I just assume everything is Union. I haven’t done it any other way.

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Matt Schulte's avatar

Might just name it Big Sir Place.

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