Currency Woes – Why the Weak Dollar Is Helping and Hurting Hollywood
I agree with his opening statement, that…
While the rest of the economy sputters, Hollywood is enjoying a windfall from the sickly U.S. dollar. The weakened currency is translating into a robust international box office and big profits for the entertainment industry.
A week dollar is great for US producers looking to secure foreign pre-sale contracts, but it can also work against US producers looking to shoot abroad.
I discuss currency in greater depth in my previous post, but in short, if you’re planning to shoot in a foreign country, you should either:
- Use local financiers or investors who can lend in the requisite currency;
- Lock-in your currency by purchasing forward contracts on margin (i.e. have your equity investor put up 10% of your foreign currency requirements.)
- Include a currency reserve in your budget (e.g. allocate enough money to absorb the impact of any negative currency fluctuations.) At a minimum, the reserve should be between 2.5% and 5% of your budget.
When it comes to currency, everything is changing all of the time. Flashy headlines about currency windfalls should neither be a catalyst for racing into production, nor a deterrent for shooting where you need to. Trying to time the market is as futile as chasing better tax credits.
So let’s recap…
When’s the best time to shoot a movie? When you’re financing and talent packages come together. Where’s the best place to shoot your movie? Wherever it makes the most sense (creatively and financially).