Why I Do Not Film in Michigan

I have never recommended a producer film in Michigan, even in its heyday. Their film tax credit program has had problems on every level, from its inception.

[Read More]

Currency Woes – Why the Weak Dollar Is Helping and Hurting Hollywood

by Jeff Steele

Brent Lang at TheWrap.com just posted a good article on how currency fluctuations are effecting film finance, film production, foreign sales and overseas box office.

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:

  1. Use local financiers or investors who can lend in the requisite currency;
  2. Lock-in your currency by purchasing forward contracts on margin (i.e. have your equity investor put up 10% of your foreign currency requirements.)
  3. 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).

5 Responses leave one →
  1. August 2, 2011

    Perfect timing for me and some projects on the board.

    Something new to throw into the mix.

    Thanks Jeff!

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  2. Mikos permalink
    August 3, 2011

    Great info. I hear of productions wanting to go overseas, Czech, Hungary, etc., but never hear a word about the currency issue!

    Thanks, Jeff.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  3. August 3, 2011

    ‘Steele remembers one project on which he was $400,000 in profit thanks to the exchange rate after he lined up his funding, but was nearly $500,000 in the red three weeks into shooting after the dollar surged unexpectedly.’

    This is where hedging is a must when in FX profit. Very benefiticial to have a currency broker guiding on the best time to fix exchange rate at the right time.

    – Basic Limit and stop loss orders with forward contracts to fix exchange rates would have avoided any FX fluctuations.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  4. August 3, 2011

    There is nothing in this article concerning the Canadian Dollar and all of the shoots that happen north of the border. If there was a co-production treaty with Canada, imagine going south to shoot a film and getting more with the mighty Canadian dollar.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  5. Joe Orlandino permalink
    August 5, 2011

    Excellent piece Jeff. Very timely for me.
    Thanks.

    GD Star Rating
    loading...
    GD Star Rating
    loading...

Leave a Reply

Note: You can use basic XHTML in your comments. Your email address will never be published.

Subscribe to this comment feed via RSS