1. Peter’s Friends A Case Study in understanding film finance

2. Backstory Exhibit ‘A’

3. The Backstory Jan. 92. Renaissance Films (Ken Brananagh’s production company) - looking for a cheap commerical script from which to make a quick money-making movie. Script is filmed using actors squeezing between other commitments. From first treatment to end of principal photography takes only three months.

4. The Backstory Members of the cast each worked for flat $15,000 fee plus ‘points’ - small percentages of the final profits. Five Week, six day shoot goes smoothly. Film comes in (slightly) underbudget.

5. The Backstory Film designed to appeal to the US market which had proven receptive to UK comedies. HOWEVER… US hated it and US distributor lost heavily on the theatrical release. Does unexpectedly well in UK and France and performs satisfactorily elsewhere.

6. Dramatis Personae Renaissance Films - Ken Branagh’s productions co. Channel Four - UK television Samuel Goldwyn Company - (Relatively) Smallscale US production/distribution company Entertainment - Again, relatively small-scale UK distributor

7. The Basic Financial Facts IncomeExpenditure Samuel Goldwyn Co.$1.5mDevelopment$280,500 Channel 4$600,000Production$1,218,000 Renaissance$253500Post-production$522,000 Total Income $2,353,500 Direct Costs $2,020,500 Contingency$202,050 Completion bond$52,500 Total Budget$2,275,050 Actual Spend$2,260,050

8. The Deal Goldwyn - got world distribution rights outside the UK. Renaissance retained 66% of all revenues once Goldwyn recovered its advance and cost. Channel 4 - Spent $600,000 on the UK TV Rights Renaissance - threw in $253,500 of its own money Entertainment - Agreed to distribute the film (but offered no money up front).

9. The Deal Entertainment were allowed: - to recover their p&a expenditure - to take 30% of theatrical rentals up to £500,000 - to take 20% of theatrical rentals above £500,000 REST OF UK RENTALS WENT TO RENAISSANCE

10. Actual Performance - Breakdown by Territory UK Box office rental (i.e. after the cinemas have taken their first cut): MINUS Distribution Fee P&A Leaves Renaissance with $1.481m $371,000 $970,000 $140,000 from UK cinema

11. Actual Performance - Breakdown by Territory UK Video Rental Income$1,090,000 MINUS Marketing Costs$282,000 Distribution Fee$242,000 Leaves Renaissance with UK video earnings of$565,000

12. Actual Performance - Breakdown by Territory US Box Office Gross $3,200,000 Rental (Distributors Income) $1,300,000 Distributor’s costs: Distribution Fee$260,000 Advance to Renaissance$1,500,000 Interest and costs$500,000 P&A$2,400,000 Total Costs$4,660,000 Final Outcome For Goldwyn in US ($3,360,000) loss

13. Actual Performance - Breakdown by Territory Goldwyn in the Rest of the world Rentals$5,100,000 Fees/Expenses$1,360,000 Total Income$3,740,000

14. Actual Performance - Breakdown by Territory Therefore Goldwyn loses $3.36m in the US on Peter’s Friends but makes $3.74m in other territories. I.E. Goldwyn has a surplus of $380,000. Renaissance gets 66% of this or $250,800. (Goldwyn takes home only $129,200)

15. Renaissance’s Total Income from “P’s Fs Renaissance’s Total Income from “P’s Fs” UK Theatrical$140,000 UK Video$565,000 US/Rest of the World$250,800 Channel Four$600,000 Goldwyn$1,500,000 TOTAL$3,055,800

16. Renaissance’s Total Income from “P’s Fs Total Income$3,055,800 Negative (Actual Production) Cost:$2,260,050 Leaves:$795,750 Renaissance originally invested:$261,000 –(Originally $253,500 before interest accrued) Therefore clear profit left of:$534,750 (204% on the original investment)