Podcast – Finance plans explained

What you need to know about ‘the bible’ of all screen productions: the finance plan.

Miss Fisher & the Crypt of Tears, Shana Levine, Ride Like a Girl

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What’s the difference between marketplace and equity investors? What’s direct and indirect finance? What are some of the trends we’re seeing in deals at the moment?

Screen Australia Senior Investment Manager Shana Levine, who has worked on projects including Bluey, Five Bedrooms and Ride Like a Girl, answers these questions and much more on the latest episode of the Screen Australia podcast.

Levine defines a range of industry terms before explaining a crucial document all productions use – the finance plan. Her focus is on feature film finance plans because they are typically more complex to put together.

Levine also explains another document all productions with Screen Australia investment use, called a recoupment schedule or waterfall.

You can find an example of finance plan by clicking here, and an example of a recoupment waterfall (with notes) here, which you can follow along with throughout the episode. Screen Australia templates for finance plans across feature film, TV drama, online and documentary are available in the document library.

Levine says the five most common mistakes she sees in applications for production investment funding are:

• Script(s) not being fully developed or production ready when applications are submitted.
• Not having the required marketplace attachments (as detailed in the guidelines) for the project to be considered eligible for funding.
• Not having sufficiently detailed deal memos to back up contributions in the finance plan including private equity contributions.
• Counter signing deals before Screen Australia has had a chance to consider, provide comments and negotiate the best terms.
• Not filling out finance plans correctly  or categorising contributions incorrectly, such as:

• Calling a contribution “equity” when it’s really a gap loan from a lender who would like a place in the worldwide recoupment schedule – nicknamed “gappity”
• Incorrectly labelling and attributing state body contributions e.g. Film Victoria assigned production investment is actually attributed to the Producer as equity in a finance plan as seen in under Equity Investors in this example

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AUDIO TRANSCRIPT

 [00:00:02] Caris Bizzaca Welcome back to the Screen Australia podcast and our first episode of 2020. I'm Caris Bizzaca, a journalist with Screen Australia's online publication Screen News. And on the podcast today, I'm joined by one of my colleagues at Screen Australia, senior investment manager Shana Levine. In her role at Screen Australia, Shana is responsible for assessing applications for production investment funding and has overseen titles including Bluey, Five Bedrooms and Ride Like a Girl. The purpose of this episode is to give an understanding of a crucial document all productions use: the finance plan. Shana also explains another document all productions with Screen Australia investment use, called a recoupment schedule or waterfall. To begin, though, Shana gives a crash course in a range of industry terms, including equity, marketplace and profit vs recoupment, before diving into the finance plans themselves. And Shana also reveals trends in deals and advice for anyone thinking about applying for production investment funding from Screen Australia. In the supporting article for this podcast on the Screen News website, which we've linked to in the show notes, we have also provided a sample fictional finance plan and waterfall document so that you can follow along with it or refer to it while listening. It's also worth noting that feature films, TV, documentary and online all require different finance plans - and they're all available on the Screen Australia website - but in this episode we focus largely on feature film finance plans, which are typically more complex to put together. Remember as well, you can subscribe to the Screen Australia newsletter for all the latest from the Australian screen industry and also subscribe to this podcast on iTunes, Spotify, Stitcher or wherever you listen to podcasts. But without further ado, here's Screen Australia senior investment manager Shana Levine.

[00:02:02] Caris Bizzaca Shana, welcome to the Screen Australia podcast.

[00:02:05] Shana Levine Thank you.

[00:02:05] Caris Bizzaca And so, first of all, for anyone that doesn't know, what do you do at Screen Australia? And what does that entail?

[00:02:13] Shana Levine Well, I'm a senior investment manager and there's another one of me in Sydney, so I'm based in the Melbourne office, and we have another investment manager in the team as well.

[00:02:21] Caris Bizzaca And what we basically do is assess production applications for feature film, television, adult television and children's programs as well. And we basically then go through those applications and make recommendations as to whether or not we should invest in them.

[00:02:39] Caris Bizzaca And then the online team is separate.

[00:02:40] Shana Levine The online time is separate and the documentary team are separate again.

[00:02:44] Caris Bizzaca And so what would be some of the titles you've then worked on?

[00:02:47] Shana Levine Some of the projects I've specifically managed include Ride Like a Girl. That was a really interesting one because it was also our first Gender Matters project that we supported. Some of the other things like The Dry, Relic (which just got into Sundance), Winchester, Storm Boy, Danger Close, and Miss Fisher and the Crypt of Tears for feature films. And some of the TV shows - Five Bedrooms, SeaChange, Stateless, Picnic at Hanging Rock, Les Norton, Safe Harbour (which just won an International Emmy Award), Romper Stomper, My Life is Murder, just for a few. And then some of the kids shows, our favourite Bluey. Then we also have The Inbestigators, The Unlisted, The Bureau of Magical Things, 100% Wolf, Nowhere Boys, just for a few.

[00:03:35] Caris Bizzaca So some of those have released in maybe the past year or so. And then there's a few of those titles that for anyone that didn't recognise them, they'll be releasing soon, things like Stateless and Miss Fisher and the Crypt of Tears. So before that, what was your background in the industry?

[00:03:51] Shana Levine So I actually started off as an entertainment lawyer and did that for about 10 years and worked as an associate. Prior to that, I actually got a scholarship and studied at UCLA, studied entertainment law there and also some film studies and political science. I then went and produced, so I was a producer for about 10 years at a company called Instinct Entertainment. And we did a number of projects, including Strange Bedfellows, Charlie and Boots and Till Human Voices Wake Us (feature films) and a few documentaries as well. And now I'm at Screen Australia.

[00:04:23] Caris Bizzaca And the kind of legal background I'm sure helps a lot with things like contracts.

[00:04:28] Shana Levine Immensely. Yes. (laughs)

[00:04:30] Caris Bizzaca So what does production investment mean? Because that's part of the content team here at Screen Australia. But what is that and how is it different from something like development?

[00:04:43] Shana Levine I guess Screen Australia is set up to promote development and production. And I guess the area that we work in is probably the largest dollar amount. Roughly 40 million dollars is spent on drama - feature film and television and that includes children's. And development ranges from, I guess, developing a script or a project or an idea or maybe doing some initiatives to help progress talent. or workshops or ideas. Volume-wise there's a lot more in development because there are ratios of, you know, you develop a certain number of things, but only I guess a small amount of things actually go into production and there is a natural attrition rate because it's hard and there are a lot of things to take into consideration, which is part of what we're assessing, which is the creative team, the commercial potential, the marketplace that's attached to it and the potential reach to audience.

[00:05:35] Caris Bizzaca But then something that has gone from development to production is something like, say, Ride Like a Girl or Relic, that you spoke of.

[00:05:41] Shana Levine Yes, but I should also point out that a lot of what we do in production hasn't gone through development either through Screen Australia or the state bodies. Some of it has, but some of it hasn't. So it's a factor, but it's not determinate as to whether or not we would get involved.

[00:05:55] Caris Bizzaca Yeah, because particularly TV, a lot of that development would be in-house anyway, right?

[00:05:59] Shana Levine Yes. Or by the networks.

[00:06:01] Caris Bizzaca And what is assessing projects typically involve?

[00:06:06] Shana Levine Well, it's quite holistic. So you're looking at literally a whole picture. So most of the investment managers have some sort of background in production to really understand the difference between an idea and the realistic execution of that idea. So we are assessing everything from the script - and when it comes in to us, it's meant to be production ready. So unlike development where you're still trying to develop it to its full potential, we expect when a script to come in to be ready to go. That's number one. Then on top of that, we look at the package. So what does that mean? We're looking at the talent, the writer, the director, the producer. What have they done before? Is that hopefully, you know, someone that is helping us with our Gender Matters targets as well, within the mix. It's not the only determining factor, but it's a factor that we also look at. We also look at the story as a whole. What is this story? Why does it need to be told? What is about it now? Is it something in the zeitgeist? Is it likely to connect with an audience? Whether that audience is horror or commercial or arthouse? It has to have a really clear pathway to that audience. And so the marketing side of it is also a really important part of our assessment. So in that we look at who's attached in the marketplace. We can go through that a bit later, but you know what elements are attached to help us get the story out there and are they the right people and the right fit to actually do that. As well we look at the budget to make sure it's realistic for what they're trying to achieve for that story.

[00:07:26] Caris Bizzaca As in like when reading the script that the budget is matching what's in the script?

[00:07:31] Shana Levine Yes. So for instance, if it was a big action project and the budget was three million dollars, we would be like, well, there's something not quite right there. And that will probably be reflected in the experience of the producer, which is also something we'd look at to make sure they can deliver that type of project.

[00:07:45] Caris Bizzaca And for anyone that wants some more information on budgets, there was actually a podcast episode specifically about that with Kelly Vincent from Screen Australia. So you can delve into that. But in this episode, some of the things that we'll be going through there is assumed knowledge, so I thought that it would be a good idea to go through some of the terms that might crop up. You mentioned one of them just before, that was Marketplace. So what does Marketplace mean?

[00:08:11] Shana Levine So in a finance plan, the Marketplace section basically reflects certain people or companies who are promising some amount of money in return for rights to represent that film in the different territories, or TV show.

[00:08:25] Caris Bizzaca And so something else that comes up is a sales agent. For anyone that doesn't know what is a sales agent.

[00:08:31] Shana Levine Right. So the sales agent basically is an agent that will then try and sell your project to distributors in the various territories around the world.

[00:08:37] Caris Bizzaca And then how do you get a sales agent?

[00:08:39] Shana Levine You pitch and you make relationships and you go to markets and you basically look at the type of project you have, that you want to make and you see who else is representing that type of project worldwide and you try and make those connections.

[00:08:52] Caris Bizzaca So if anyone's going to one of those big international markets, they can always talk to Screen Australia before they're going about those relationships with sales agents.

[00:09:01] Shana Levine Correct. Part of our job is to facilitate those relationships and check in with our current sales agents, both at MIPCOM, the TV market, and all the film markets. We basically touch base with all of our distributors and sales agents who are attached to our projects and ask them, you know, what's working for you? How do you find this Australian product? Is it selling well? So we try and help facilitate those relationships as well.

[00:09:21] Caris Bizzaca And so then what is a distributor and well, we'll start with that first, so what is a distributor?

[00:09:26] Shana Levine So the distributor actually distributes your product in that territory. So the sales agent has sold it to the distributor and the distributor thinks they can get a certain amount in that territory. And then they go and if you like, sell it again to the exhibitors. So in Australia, like Roadshow  orMadman as an example of distributors and they would then go to book the particular film with various exhibitors such as Hoyts or Palace or Event.

[00:09:51] Caris Bizzaca Okay. So when we talk about a distribution guarantee or a DG. Yes, what is that?

[00:09:58] Shana Levine So a distribution guarantee or a minimum guarantee or a minimum advance - they are all kind of interchangeable terms. Basically, it's an amount of money that that distributor is willing to put up to secure the rights for that territory. So basically what we're saying is, you know, as an example, Roadshow might say we really like this film for Australia and they put up a portion of money that goes into the finance plan as a distribution guarantee.

[00:10:20] Caris Bizzaca And so when we say ANZ DG...?

[00:10:22] Shana Levine That's the Australian and New Zealand guarantee for the rights to distribute the film in Australia and New Zealand.

[00:10:28] Caris Bizzaca Okay. And so then what is a Minimum Guarantee or MG?

[00:10:33] Shana Levine Well, it's pretty much the same. It's just that sometimes we'll talk about in the rest of world (ROW), we'll talk about it as a Rest of World Minimum Guarantee (ROW MG). So that's for the international rights. But again, what can happen is instead of a distributor, you might have a sales agent putting that up and they might put it up for the whole Rest of World or might be for a particular territory. So you might have someone on board that says, I'm willing to give you X amount of dollars for the US and someone else will say for Europe or... so it can be broken down further. But as a guide at the moment, Screen Australia requires an ANZ theatrical distributor to be attached for a feature film project to come in. And we also require a sales agent to be attached. This is even just to be eligible before we can consider investing in a project.

[00:11:16] Caris Bizzaca Okay. So that's something that you'd need in your application before you can even apply for production investment. So you was talking about a Minimum Guarantee before for Rest of World and you were saying how the territories can be split up - so then what is a presale? Let's say you have like a presale to the US.

[00:11:36] Shana Levine So that means in that case the project's already been pre sold to a distributor in that territory. So it's not something that has to happen later. That money's already in there to go towards the budgeted cost and it goes into the finance plan.

[00:11:49] Caris Bizzaca And how many presales can you have?

[00:11:51] Shana Levine Well as many territories as there are.

[00:11:52] Caris Bizzaca Great.

[00:11:53] Shana Levine But it would take a long time.

[00:11:55] Caris Bizzaca Yes. You might want to get going, starting that. And so then what is a gap loan?

[00:12:01] Shana Levine So sometimes even with all those attachments, so you've got you're ANZ distribution, you've got your Rest of World sales agent that's put up a guarantee, but they don't always put up a guarantee. And even with all your state body investment and what you're hoping to get from Screen Australia and all your other sources of finance, whether that's private investment or some reinvestment or whatever it is, there's still what's known as a gap. And so there's a particular type of loan which is called a gap loan, which is a really high risk loan from a lender or a bank that specialises in this area. And it's based on estimates from a reputable sales agent that they provide against certain unsold territories. And then the sales agent basically calculates how much money they think that feature will be able to get from those unsold territories. And they're really, really high risk loans. And because of that, they generally attract high interest and fees. But most mid-to-large-budget independent features will have some portion of gap in their finance plan.

[00:12:55] Caris Bizzaca OK. So even though it is high risk that people should be aware if they've got anything from a mid-level feature film, that is highly likely going to be a gap loan involved in the finance plan.

[00:13:07] Shana Levine Yes. But also the lenders always work with a particular sales agent. So they'll only work with someone who they know that their estimates are reasonable and reliable. So they're taking a risk based on those estimates. And it has to be for an unsold territory. So for us at the moment, you can never have a gap loan for Australia because we require the territory of Australia to be pre sold as an example.

[00:13:28] Caris Bizzaca And so if someone's unsure about how to get a gap lender, can they find a list of them or is that something that the sales agent, like you said, has a preference of who they would work with?

[00:13:39] Shana Levine That's a really good question. We have an internal list of gap lenders that we work with. It's not published, but we're always again, happy to offer advice and make introductions for lenders that we've worked with and kind of set the parameters as to what's acceptable for Screen Australia.

[00:13:52] Caris Bizzaca And so another word that will come up is equity. What's equity and then what's an equity investor?

[00:13:59] Shana Levine So when we talk about equity in a film sense, we're actually talking about a value that's attributed to ownership. So equity investors have a share in the ongoing recoupment, profit and copyright of a film, which is unlike the marketplace contributors who basically put some money up, they get that money out pretty quickly, but they don't have ongoing - they shouldn't have ongoing participation unless the producer agrees to give them some ongoing participation out of their shares. But the equity investors are the owners of the asset, which is the film or the TV show. And basically when we talk about recoupment for that, we're actually talking about people or companies getting back the money they spent on getting the film made.

[00:14:38] Caris Bizzaca So it's kind of like when you're talking about Marketplace before anyone that is in marketplace, they will get back the money that they put in, but they don't then over the lifetime of the film, say, you know, in 20 years' time, they're not going to be getting money back in.

[00:14:53] Shana Levine Correct. That's the theory.

[00:14:55] Caris Bizzaca In theory.

[00:14:56] Shana Levine Yes.

[00:14:57] Caris Bizzaca And so you talked about recoupment. How is recoupment different to profit?

[00:15:04] Shana Levine Well, it's quite different because you can begin recouping money anytime from - we'll just talk about film again - (but) from when the film starts making revenue. But a project actually only goes into profit once all the costs and the marketplace contributions and all the equity investments have been paid back in full. That's why it's difficult for a film to go into profit, but it doesn't mean that a lot of the participants haven't started receiving money back.

[00:15:25] Caris Bizzaca So if we do like a hypothetical of this example and say someone, an equity investor has a hundred dollars in a very, very, very, very small film. So everyone from Marketplace would be earning back what they've put in. But you can begin recouping during that process. Is that correct?

[00:15:47] Shana Levine It's sort of tricky to do without showing a finance plan. But Marketplace can only recoup their contributions back from the territories that they're involved in. So like the Australian distributor can recoup their guarantee out of Australia. And you know, the US out of US. So we don't allow crossing, which is a big thing for Screen Australia. So we we expect the the risk to go with the reward in that sense. But equity investors are actually allowed to recoup from worldwide everywhere. That's part of the benefit of ownership. But you are a lot further down the line in that recoupment waterfall.

[00:16:22] Caris Bizzaca The recoupment waterfall, which we will talk about very shortly.

[00:16:24] Shana Levine And just quickly, Screen Australia generally, but not always, because we have a slightly different policy now for second series for TV, but generally less than $500,000 we treat as a grant. So it's actually not recoupable. It actually goes, if you like, to the producer. They can have the money to make the show and we don't have to get that money back.

[00:16:43] Caris Bizzaca So that's specifically for Screen Australia's grant. But anything over that Screen Australia is still considered an equity investor.

[00:16:50] Shana Levine Yes. And sometimes for TV second series now we're also considering even amounts below $500K as investments.

[00:16:57] Caris Bizzaca Also, does Screen Australia retain the copyright to everything that it funds.

[00:17:02] Shana Levine Only production investments. So for development and grants, no.

[00:17:06] Caris Bizzaca And for production investment, so that's again anything over $500,000, it only retains, is it 1%?

[00:17:13] Shana Levine Yes. So basically there was a policy a number of years ago now - soon after Screen Australia started - is that it used to be basically calculated according to your contribution as a percentage of budget. So Screen Australia decided that it only needs one percent of copyright to have a seat at the table to be able to be part of the decision making over the life cycle of the film.

[00:17:34] Caris Bizzaca And then some more terminology questions. What's direct finance?

[00:17:40] Shana Levine So direct finance is basically finance is directly attributable to whatever body, so like grants or investments for Screen Australia.

[00:17:47] Caris Bizzaca And that can be investments of any size.

[00:17:52] Shana Levine Yes.

[00:17:52] Caris Bizzaca And what's indirect finance?

[00:17:53] Shana Levine Indirect finance. The best example of that is the Producer Offset, which gets attributed to the producer as equity.

[00:18:00] Caris Bizzaca Okay. So now that some of the terminology is done, let's talk a bit about finance plans. So first of all, what is a finance plan?

[00:18:10] Shana Levine Can I say the finance plan is my favourite part? (laughs)

[00:18:14] Caris Bizzaca You can. You can. (laughs)

[00:18:15] Shana Levine I'm a nerd.

[00:18:17] Caris Bizzaca What, your favourite part of your entire job is finance plans?

[00:18:20] Shana Levine No, I'm I'm still amazed, including myself, how long it took me to understand them. But basically, the finance plan is the Bible, it is the map which shows everything if you like. It is the foundation of the project. And it does form part of the contract between you and all your other stakeholders. So it shows how your project is financed, where all the money is coming from, so you've got the money to actually make it. And then it also shows you how it will all be recouped and how the money will trickle back through to the marketplace participants and to the investors. So basically no one can apply without having a complete and agreed finance plan before we go into production. It often does evolve, though, even post approval. And it's interesting that no two projects are really financed the same way. But there are a number of best practices that we try to enforce and try and help because we have the benefit of being across a number of projects. Almost all projects, if you like, that have come through here. So we're able to negotiate better positions for producers and that's something that we offer. That's part of our remit.

[00:19:23] Caris Bizzaca So you're saying that because Screen Australia sees so many finance plans across the board that you can see when there's things that maybe aren't as good a deal as a producer might think?

[00:19:34] Shana Levine Correct. And I mean, it takes nine years on average for a feature film to be developed. So if you're a feature producer and even if you're lucky enough to do one every five years, you can imagine your currency of knowing what's reasonable in this ever changing market is not going to be as up to date as us. So, you know, for example, in the last financial year, just our production drama team, we were responsible for investing $19.6 million in 17 television drama shows, $14 million for 20 feature films, and almost $7 million for eight children's programs. And that's only the ones that we've actually invested in. That doesn't tell you all the ones that came in and weren't successful, which is unfortunate. But so what I'm saying is we have that oversight and so we're able to use our collective knowledge to help negotiate better terms. And the other thing I guess I should mention is that even though we say it, it's really important for prospective applicants for drama to have spoken to an investment manager before they come in, because often we are working on these finance plans and these deals for months, if not years prior to application. So we will very rarely accept an application that hasn't spoken to someone beforehand. So we are usually very familiar and have negotiated quite a lot before the project even comes in.

[00:20:45] Caris Bizzaca And so how early then should someone get in contact with Screen Australia about their project?

[00:20:51] Shana Levine Okay. So if they've been fully developed, sometimes we will have an idea of something that's already going through the development process, just through relationships or through Sally Caplan, who's across production and development, our Head of Content. Usually when the script is ready and the marketplace starts attaching all this cast, you know, those discussions usually start happening then and we start working with producers and help finessing the deals and the finance plans and making introductions.

[00:21:17] Caris Bizzaca And so just to be clear, what are some of the things that are included in a finance plan?

[00:21:21] Shana Levine So a finance plan is a summary of everything that makes up the budgeted cost of the project. So it has all the marketplace contributions, it has all the indirect finance, it has all equity finance, whether that's grant or equity. And it also includes the Offsets. It can also include other incentives from some of the state bodies and other additional incentives, such as top ups on PDV and things like that.

[00:21:46] Caris Bizzaca So finance plan is essentially showing exactly how your project is being financed from all the different sources.

[00:21:53] Shana Levine Correct. That's exactly what it does.

[00:21:55] Caris Bizzaca So that's finance plans. Another thing that they work with is called a recoupment, waterfall or otherwise known as a recoupment schedule. What exactly is a recoupment waterfall?

[00:22:08] Shana Levine So I actually think back to when I first started at UCLA and my entertainment law professor tried to explain what profit was in the entertainment business and he explained it best by saying, imagine there's a trough and there's a row of pigs and the waterfall is basically who gets their snout in and when, like the order of who gets to have a bite at that. And it was a really good picture because it really made me try and understand what happens. So Screen Australia has a lot of rules around, you know, what we would like to see basically to try and protect the producer's equity in projects and also our own because any money that Screen Australia gets back goes straight into production. So the recoupment portion of our business is actually significant enough to be worth fighting for. So basically it sets out into the different territories, at least Australia and the Rest of World, the order in which money can start to come back to all the marketplace participants and financiers and lenders and equity investors.

[00:23:08] Caris Bizzaca And when he said producer's equity, is that the Producer Offset?

[00:23:11] Shana Levine Yes.

[00:23:11] Caris Bizzaca Okay. Which is 40% of Qualifying Australian Production Expenditure or QAPE for feature films and then 20% of QAPE for television. That's correct.

[00:23:21] Shana Levine But there's also other producer equity. So if the producer invests as well, they'll have that equity and might also have assigned equity, for example, from Film Victoria, or it might have another grant from another state body or it might be having a payroll tax or some other incentive. Again, that's all attributed to the producer and it's all deemed producer equity.

[00:23:40] Caris Bizzaca Okay. So how does then a recoupment waterfall work with a finance plan? Because these two documents work together very closely, right?

[00:23:50] Shana Levine They do. So we try and set out as close to possible around approval or very close to approval, that we try to be upfront about what's going to be acceptable and what's going be agreed and negotiated on a project before we've agreed to invest. And part of that is negotiating acceptable positions in the recoupment waterfall. We also have and we work, as I said before, closely with Kelly, who is part of our team.

[00:24:13] Caris Bizzaca Kelly Vincent.

[00:24:15] Shana Levine Kelly Vincent. See her earlier podcast.

[00:24:18] Caris Bizzaca On budgets.

[00:24:19] Shana Levine She's very good at formulas. I can do the words. She does the formulas.

[00:24:22] Caris Bizzaca She's the Excel queen.

[00:24:24] Shana Levine She's my Excel spreadsheet whiz. And so basically, I'll say, 'Kelly, we've agreed, blah, blah, blah, blah, blah.' And then she can put in. So what we try and do is not give people unlocked finance plans, but as we negotiate positions that we're all happy with. I will ask Kelly to prepare another version with those new assumptions in there so that it's really clear we have different columns of what happens first, what happens second, what happens in the Rest of World, what happens in shortfall catch ups, which I won't go into now. But basically it is complicated. But you know, it's interesting. And if your finance plan is really robust and has been negotiated and populated correctly, it actually makes the waterfall a lot easier.

[00:25:02] Caris Bizzaca And how then do you know if a recoupment waterfall is being followed after you've made the project? How do you know that the money is kind of coming in and going to the different companies and people as it should?

[00:25:14] Shana Levine Right. So we basically require for all feature films that a collection agent or disbursement agent is actually attached to the project, and that's their job to do that. Otherwise, for television and other projects, if they're not that complicated, we contractually obligate the producer in our production investment agreement to collect them, disperse those receipts and there are audit provisions and notice provisions to make sure that everything's okay.

[00:25:36] And there's also a part of Screen Australia that does track the recoupment. Yes.

[00:25:43] So we have a really fantastic robust marketplace section of the agency and they like where across all the pre deals they have all this marketplace intelligence. So Screen Australia has approval over any post sales. That means post financing. And so they have all of those amounts listed, they're aggregated and they're confidential, but they know how much a drama of this budget in this territory should be getting at this point in time in the market. So it also just helps with that market intelligence to know whether it's a good deal for a producer or a bad deal or the only deal or no deal. They have that intelligence to back up our approvals.

[00:26:20] Caris Bizzaca And that is also another part of Screen Australia that people can get in touch with if they want to talk through some of that information. So because this is quite complicated territory, if you're fairly new to the industry, what kind of advice would you have for people that are looking at finance plans and recoupment waterfalls for the first time?

[00:26:41] Shana Levine It's really important at this level to be dealing with an experienced producer. And there are different aspects of producing, you know, this creative producing those financial producing, there's producing to be on top of all the contracting, there's producing to manage the talent. You know, producers are actually, it's quite a wide-ranging role. And some producers can do all, but usually there's one or two aspects of the producing role that you're really good at. And then the suggestion is to team up with someone else that has those other attributes, whether it's an executive producer that's really good at financing or has key relationships with casting agents, for example, because you need to have your cast to be able to get your marketplace. Or you might just be a really good creative producer and you've worked really well and you've helped write and develop the script. So it's just recognising, I guess, what your skill set is. And then making and forging really good relationships to sort of help in those other areas.

[00:27:32] Caris Bizzaca And for anyone that isn't sure about doing that - go to different markets?

[00:27:38] Shana Levine Go to markets, join the lists, join the email newsletters of all your state bodies and the federal body and join your relevant guild, whether it's the Writers' Guild, Directors' Guild, Producers' Guild - start making those relationships.

[00:27:50] Caris Bizzaca And so then are you seeing any trends in the financing of Australian projects that you think that people should be wary of? You just said gapity, I don't get one, but what are some of the trends?

[00:28:02] Shana Levine Well, the trends are, look there's major disruption going on in all areas of the business right now. So it's basically being able to try and keep up with the rise of SVODs and what impact that's having generally. The long tail that we used to have with DVD and home entertainment generally is changed, which is changing the amounts you can get up front and the theatrical viability of a lot of projects because that long tail is no longer there. So it's more about being able to adapt to the current and changing marketplace and understanding what's important now and the best place for your content and how then you can raise the money to make that content.

[00:28:40] Caris Bizzaca And how do you know then if something is a good deal or not in terms of, let's say like the amount being offered for like a DG, a distribution guarantee, or minimum guarantee?

[00:28:51] Shana Levine That's a very good question. Part of what we assess and us having that knowledge across a breadth of projects is letting people know whether we think the range is reasonable or not, depending on that particular distributor for that particular project. Again, as I said before, it's about having the right company for your project. So again, if you've got like a really big budget project, but you've got a tiny little micro distributor attached, putting up a little DG, we would probably say, well, that's not the right distributor for that project. And if you can't get the distributor, that would usually operate in that kind of budget range, we would ask why. So, that's part of that holistic assessment that we talk about, is that it's not just the creative, but it's the creative with that marketplace potential and being the right fit.

[00:29:34] Caris Bizzaca You said earlier how feature films can be in development for nine years or something like that. And I'm just wondering, do you find that in some of these applications it's this kind of compromise of producers or filmmakers getting to a point where they just really want to make the project, but maybe the deals aren't so good and having to talk them through that.

[00:29:57] Shana Levine Yes. And, you know, I think it's also a really exciting time. There are so many other avenues for content now. We're seeing in the last year we had a flip between the amount of television production - when I say television, I'm obviously also talking about SVODs - a completely different flip from the amount of feature films to TV drama. So there's other exciting avenues to tell your story and feature film may not be the best way to do it. So that's part of what we discuss.

[00:30:23] Caris Bizzaca And so in terms of the finance plans as well, how different are the finance plans for feature film compared to television - is one more complicated than the other.

[00:30:33] Shana Levine Yes. So basically feature film is still the most complicated. And part of that is because of the difference in the QAPEable amounts for offset. So because you've still got a much bigger gap in film, at 40%, it still is harder to raise the money as an independent distributor, whereas generally speaking, television finance plans are less complicated. However, now with bigger budgets and higher profile cast, we are seeing a little bit of creative financing in television budgets as well. There's the odd one that has some gap financing. And interestingly, this is new for a lot of TV-only producers who generally get a local broadcaster and an international onboard and they've kind of financed that with their state body and Screen Australia. So it's opening them up to a little bit more interesting finance plans. But at the moment, still feature film is the most complicated.

[00:31:23] Caris Bizzaca And even though there are huge variables with the recoupment waterfalls as a complete hypothetical, what would be an example of how that trickle down would start, typically, like where would it start in marketplace and then go through?

[00:31:38] Shana Levine As a film or TV.

[00:31:40] Caris Bizzaca As a film.

[00:31:40] Shana Levine As a film. So obviously if there are a sales. So if there's more sales before you finish, that money would start sort of trickling through. Then once it goes out and, you know, it's been released, now obviously exhibitors take a cut and then distributors, there's commissions, there's expenses, there's a whole lot of things. But once it starts earning money at the box office, well that money starts coming in. Let's say then that the distributor sells airline rights. There's another sale there. So that's another receipt. So basically, all those rights that they've sort of paid money for as they start to get exploited, it starts bringing in receipts and that money starts flowing through the waterfall.

[00:32:15] Caris Bizzaca And if you were to give three pieces of advice to anyone that's putting together an application for production investment at Screen Australia, what would that advice be?

[00:32:26] Shana Levine Talk to an investment manager. Talk to an investment manager. An investment manager. As early as possible.

[00:32:32] Caris Bizzaca As early as possible?

[00:32:33] Shana Levine Yes. Because I think it's an invaluable resource to have. I mean, even when I was producing and I realised for that amount of time, you know, I'm only across what I'm developing and my company was doing, so you're just not in the loop of everything and all the things that are happening and especially now with things changing so quickly, I think it's really important to be talking to people who are involved on a day-to-day basis, things that are getting up. The other piece of advice is to go to a market. I think there's nothing more important than whether it's film or TV or documentary, whatever you're doing, or online. Go to the relevant market where all the players are. Speak to them. Forge the relationships. See what they're making. See what they're putting up money for, see what's working and see if what you're intending to do matches with any of those.

[00:33:16] Caris Bizzaca Well, we'll leave it there, but thank you so much, Shana, for joining us on the Screen Australia podcast today and talking to us all about finance plans and recoupment waterfalls.

[00:33:24] Shana Levine Well, it's my absolute pleasure. Thanks, Caris.

[00:33:28] Caris Bizzaca Now, if you're feeling a little overwhelmed by all of that information, just a reminder that we have templates for those documents on our website. And as Shana says, you can ask for help before you submit a production investment application. Remember to subscribe to the Screen Australia newsletter for the latest from the Australian screen industry. And thanks for listening.