Film Production Accounting

This post has been well received ever since I first posted it in 2009. I’m updating now to bring it up to 2014 standards.

There is a professional accounting niche that is little known – Film Production Accounting. I regularly receive queries to my web site, or my blog, about film production accounting and of how to enter this field. Most of the queries used to be from the Los Angeles area, but over the past 4 years there has been an equal number of queries from the Film Tax Incentive States.

FILM PRODUCTION ACCOUNTANT CATEGORIES AND EXPECTED PAY

Production accountants have traditionally fallen into the field without much of any kind of accounting background. I believe that film production is the last industry in the world to hire accountants who don’t have some kind of formal training in accounting. Currently, the field of film accounting is looking more appealing to a wide variety of CPA’s who are looking for something more markets to penetrate – or even to change careers. Most film accountants get into that position through a period of apprenticeship as assistant accountants. The levels usually go from File Clerk, 2nd Assistant Accountant, 1st Assistant Accountant to Key Production Accountant (sometimes referred to as the Production Auditor). Another position that is classified as an assistant accountant is the Payroll Accountant. The Payroll accountant is an expert in calculating complicated union payroll time sheets and is usually too busy to do much else than just that one function. A good payroll accountant can make in the area of $1800 to $2,000/week on the bigger Hollywood productions and are worth every cent.

The File Clerk would start in the range of $500-$900/Week, a 2nd Asst Accountant in the $900 – $1400/Week range, a 1st Assistant Accountant in the range of $1,500 to $2,300/Wk.  usually the accountants get a little more on a big Studio production, and less on a small independent production.

THE SKILLS OF A FILM PRODUCTION ACCOUNTANT

The Film Production Accountant needs to be conversant with every area of film production, if not downright expert when it comes to predicting cost overruns. The rapidity of spending during the production of the feature film, or TV show, is so high that it would be a nightmare for someone who hasn’t been exposed to the usual reporting system. That’s why an experienced Film Production Accountant doesn’t get out of bed for less than $2,500 a week (a 5 day week). Experienced production accountants demand and get at least $3,500/5 day week, and if they go on location ask for another $1,000 to cover off Saturdays worked (even though they don’t need to work many Saturdays).

The Film Production Accountant’s job falls into the same three categories as any other accounting function:

– Bookkeeping: the speed of bookkeeping has to be experienced to understand. Petty Cash is often in the $60,000 to $80,000 a week range.

-Reporting: there are very specific Budgeting and Weekly Cost Report formats which can be a bit of an IQ test until you get used to it. This type of report is used throughout the film production world from Australia to India to Europe to North America.

-Auditing: because the money appears to be spent so helter-skelter it can be abused, mostly by producers and department heads. It’s up to the production accountant to see the signals and prevent it before someone embarrasses themselves. There really are lists kept of those deemed to be A, B or C listed. Those that are B and C listed are almost always because of their inability to control their departmental budgets.

So, if you have an accounting background you can pick it up very quickly, but you really do need some experience first. The fact that you’re intimately dealing with so many facets of the actual film production it’s certainly a challenge and, I have to say after 30 years, tons more challenging and rewarding than working in manufacturing, banking, etc.

MY JOURNEY TO, AND IN, FILM PRODUCTION ACCOUNTING

My own background started out in Engineering in the 70’s. Then, when I graduated I saw that open pit mining wasn’t doing it for me, so I started working with an accounting firm to earn a designation. My original purpose was to become skilled enough to be able to use both Engineering and Accounting to help failing businesses turn around. However, after I got my accounting designation I discovered that I would be taking a steep cut in pay to go back to being a junior engineer so I took a job as a Chief Accountant/Controller at a place with about 15 branches. After 5 years I went out on my own, starting a small accounting practice with a couple of other people. After a couple of years of beating the bushes and working 7 days a week I saw that I could make more money as a Film Production Accountant than I could in my practice, so I dropped my office space, my 2 staff, and started working as an assistant accountant.

STEPPING STONE TO FILM PRODUCING AND PRODUCTION MANAGING

Like other industries, after spending many years accounting for and auditing the money, including advising producers and production managers, you start to get the idea that you can do as good as, or better job, at producing. There are many production accountants who have gone on to related film production careers – although, funnily enough, they often keep quiet about it. I presume because they want to distance themselves from the infamous “Blue Suit” – the much maligned Big Studio Exec. (Not a job for me – man, talk about pressure).

THE DOWNSIDE

A downside to Production Accounting is that you don’t ever have a JOB. You get CONTRACTS which last anywhere from 5 weeks to 9 months (pretty seldom longer than that). I’d say that my average contract on a film or TV production in the $20Mil to $40Mil range was about 6 or 7 months. Honestly, I really liked the fact of working with different people. I have often talked with other people in the biz, and we almost all agree that the independence that brings is worth the stress of looking for contracts. Once you’ve been in the business for 3 years, and if you haven’t messed up, you’ll be on call, especially if you’re willing to travel.

So, there’s the pros and cons to getting into the film production industry as an accountant.

HOW TO BUST IN

I spend some time talking about ways to bust in during the weekend workshop. With the advent of tighter and tighter money I see even more opportunities for film accountants as aides to producers, or even film accountants producing projects on their own. Subjects like Film Tax Incentives, verification of paperwork required during Crowdfunding of “Accredited Investors”, cash-flow schedules, familiarity with equity terms, etc can all be easily learned by film accountants, or by professional accountants and bookkeepers interested in penetrating this market. (If you are interested in how this all fits together see this short video).

Good luck in your career, whatever you choose.

For more about training as a film accountant see this link to film accounting workshops and training online.

John Gaskin

Problems the CPA Has In Penetrating the Film Industry

Film Production

Film and TV Production

The primary difficulty I see with the CPA penetrating the film production market is knowing what questions to ask. The CPA, generally thought of as a consultant in the usual business world, is often tongue-tied when it comes to discussing the film and television business. Rest assured , there are several interesting ways that the CPA can assist Film and Television Producers.

MOST CPA’S ARE INTERESTED IN THE FILM BUSINESS

When I speak with CPA’s about the film industry I find a lot of interest in the field. Film and Television, as a business, promises something different and unique from the usual businesses they deal with. Also, it helps that the Film & Television Industry has excellent and consistent revenue streams.

SOME OF THE USUAL QUESTIONS CPA’s ASK:

  1. What sort of accounting services does the Film Industry require from a CPA?
  2. What are the industry specific practices, reports and terminology?
  3. I hear about the Film Tax Incentives in some States. How does that open the door to new business for my practice?
  4. What software is used during a film or television production?
  5. Once the project is filmed what services would be required from a CPA in “Post”?
  6. Can the CPA help with arranging financing?

If you do some research, I think you’ll find that there is very little, if any, information available online – and most of what you’ll find is authored by me.

WHAT PRODUCERS EXPECT FROM A CPA

Producers and Studio Execs have high expectations of anyone they contract with, especially a CPA who charges out at an hourly rate. They will expect the CPA to be familiar with their everyday terminology and to contribute to solutions. Just a few terms considered common are:

  • Inventory (the current cost of developing and producing “product”),
  • Fringes (government and union benefits),
  • Back-End (final equity available),
  • IATSE Turnaround (penalties assessed by crew when not enough given enough overnight rest),
  • SAG residuals,
  • etc

If you are interested in expanding in some way into the Film Industry there are a couple of ways you can learn more about it.

LEARN THROUGH WEEKEND WORKSHOPS – 14 HRS of CPE

Workshops are always the most fun way to learn. I have another Film Accounting 101 workshop coming up on May 6th and 7th, 2017 in Chicago, IL.

See the short video to see some past successes. There are numerous testimonials on my web site. For more info see http://www.filmaccounting.com/filmworkshops3.htm 

 

 

LEARN THROUGH ONLINE COURSES – 2 HRS of CPE PER COURSE

However, getting to the workshop location, and breaking away from the office, isn’t always possible – for you or for me. At the end of each online course qualifying for CPE I ask the student if the “stated objectives of the course” were met. There has never been a “No” yet…. that’s 100% of the time every student has said that the stated objectives were met. For more detailed information about the online courses see http://www.filmaccounting.com/filmaccounting-cpe.htm

 

 

 

 

Cheers / John

 

 

The Trust Barrier Facing Emerging Film Producers

BREAKING THE FINANCING BARRIER – GAINING TRUST

Once an Emerging Producer has a trusted, working script the major roadblock to overcome is financing. The concept of financing has been fraught with Ponzi schemes and false promises since money was first invented.  Is it any wonder that there is a general distrust of anyone asking for financing? … Let alone someone with little experience and  gaining the trust of investors, studio exec’s, casting directors, completion guarantors, experienced line producers, etc.

The purpose of this article is to help you break down the barriers to financing your film simply by educating you on the terms and processes taken for granted by film industry professional film producers. Watch the short video and you’ll see what I mean.

THE FILM INDUSTRY BUSINESS CYCLE

The best way I know to understand the film industry business cycle is to break it down into the basic functions of the full business cycle. The practical categories used by Producers in their everyday work are:

  • Development (Investor Confidence),
  • Green Light Stage,
  • Production Stage,
  • Post & Audit Stage and
  • The Waterfall

ONLINE COURSE – AN OVERVIEW OF THE FILM INDUSTRY

This online course takes  about 2 or 3 hours to go through, has 12 videos and a 71 page course content. I have priced this for Emerging Producers at just $39.95.

It also includes a download of a $9Mil professional budget example in pdf format.

 

 

 

For more information see  http://www.talkfilm.biz/filmbusiness.htm 

 

Cheers / John

Film Production Payroll Accountant

SAGAFilm Payroll accountants are a category that is never heard about outside of the film industry. A Film Payroll Accountant with a couple of years experience usually makes in the range of$2,000/Week. What does a Film Payroll Accountant need to know and how much demand is there for their services?

A PUBLISHED “WANTED AD’s” FOR FILM ACCOUNTANTS

There is one source that many studios, producers and production accountants use to find available film accountants, including film payroll accountants. It’s referred to as “Emily’s List”. Those who post there are Producers looking for various levels of film accountants to work across America, and even up into Canada. The internet address for Emily’s List is at http://www.ricegortonpictures.com/blog/

ALMOST 40% OF POSTS ARE FOR PAYROLL ACCOUNTANTS

I went through the last 100 listings or so, to see how many postings were for Payroll Accountants. I found that 4 out of 10 listings are for either a Film Payroll Accountant, or for a Film Payroll Clerk. That makes the other 6 out of 10 listings shared by Key Accountants, 1st Assistant Accountants, 2nd Assistant Accountants and File Clerks. Wow…. that proves to me that the Payroll Accountant is in demand.

NOT YOUR USUAL PAYROLL ACCOUNTANT

Film payroll accounting is all about knowing the union rules for cast (Screen Actors Guild), directors and assistant directors (Directors Guild of America), crew (IATSE) and drivers (Teamsters). The skill is derived from knowing how to calculate the “Gross Pay” – that is, the amount of gross pay after factoring in overtime, meal penalties and rest violations. The  government and union withholdings and contributions are calculated and reported/remitted by the payroll service.

PRACTICE, PRACTICE and PRACTICE SOME MORE

So, the task becomes knowing how to calculate union gross payroll, and that’s all we do for 2 full days – right from beginning to end. You will be left with all of the reference material for SAG, DGA, IATSE Area Standards, and IATSE Low Budget Agreement, as well as on-line access to the full courses and materials for future reference. (A Michigan Teamster Agreement is reviewed at the end of the 2nd day; however, after doing the above it seems pretty simple).

The payroll workshop is over the weekend of May 20th and 21st, 2017 in Chicago.

Hope to see you there! (Note to all you CPA’s, this is a fun way to earn 16 CPE points!)

For more info you can check out my web site at http://www.filmaccounting.com/filmworkshops6.htm

Cheers / John

Media and Entertainment Market Expected to Reach $771 Billion by 2019

HFILMACCOUNTING101ere’s what SelectUSA.gov.com has to say about the U.S. media and entertainment (M&E) industry:

“The U.S. media and entertainment (M&E) industry is comprised of businesses that produce and distribute motion pictures, television programs and commercials along with streaming content, music and audio recordings, broadcast, radio, book publishing, and video games.  The U.S. M&E market … is expected to reach $771 billion by 2019, up from $632 billion in 2015, according to the 2014 – 2019 Entertainment & Media Outlook by PriceWaterhouseCoopers (PwC).”

WHAT WOULD THAT MEAN FOR YOU?

That should be good news for anyone working on the periphery of the film and TV industry, but it should also be a wake-up call for CPA’s looking to expand their practice. Regardless if you’re interested in Film Production Accounting, or in working as a Line Producer, you’re probably wondering how you would fit into the M&E Industry. If I were you here are some of the immediate questions I would ask:

  • What does the Film Accountant do that supports and is parallel with what a Producer needs to know?
  • What qualifications does a person need to start working in film accounting? (Answer: surprisingly little)
  • What are the industry specific accounting practices, reports and terminology that the film accountant prepares and the Producer must be able to supervise?
  • How can an understanding of film accounting help me generate new business from Film Tax Incentives, and help the Producer access funding?
  • How would an understanding of film and television production open the door to new business for my CPA practice?
  • What level of billing or wages are usual for the film industry?
  • What accounting, budgeting and scheduling software is used during a film or television production, how can I get familiar with it?
  • How do I find contacts in the film industry?

Do some research. I think you’ll find that there is very little, if any, information available online – and most of what you’ll find is authored by me.

LEARN THROUGH WEEKEND WORKSHOPS – 14 HRS of CPE

Your questions will be answered in a weekend workshop, Film Accounting 101. I have another one coming up on May 6th and 7th in Chicago, IL. Learn by actually doing in a controlled environment. I keep the workshops less than 20 people so that we can have lots of one-on-one time.

 

For more info see http://www.filmaccounting.com

 

Cheers / John

 

 

 

 

 

Are the GOP Creating A Boom in Film/TV Production?

 

greenlightRemember when Canada was the first out of the gate with film production tax incentives? The film and television productions were Running Away to “Hollywood North”. Indeed, Canada still holds its own with over a billion dollars a year in crew payrolls alone. Well, this time it’s the GOP tax Reforms, not Incentives, that could cause a trend of Running Back to America, creating a boom of film/TV production.

COST OF FOREIGN PRODUCTION NO LONGER DEDUCTIBLE FOR TAX PURPOSES

If passed, the GOP proposals would no longer allow foreign costs of production to be deductible against domestic revenues. Let’s take an example:

  • Ford builds a truck in Canada for $15,000
  • Then, Ford imports the same truck to America and sells it for $30,000
  • The resulting “Net Profit” of $30,000 – $15,000 = $15,000 would be their current taxable income.
  • No longer! Under the proposed business taxation rules Ford will get taxed on the full $30,000 revenue without being allowed to deduct the foreign cost of manufacturing.
  • Conversely, say Ford builds the same truck in America for $20,000 ($5,000 more) and sells it for $30,000 then the taxable revenue will only be $30,000 – $20,000 = $10,000
  • At a 20% or 25% tax rate Ford is no longer saving money by using cheaper foreign labor.

PRODUCTION COMPLETED IN AMERICA AND SHIPPED ABROAD NOT TAXED

Another major part of the proposal is that all Foreign Revenues earned from American made products and then shipped abroad will not be taxed!   Wow! This is a complete turnabout from current standards. So, that could even help for cars sold in Canada. Let’s take the same example:

  • Ford builds a truck in America for $20,000.
  • Ford sells the same truck in Canada for $30,000.
  • Under current tax rules Ford would pay taxes on the net income of $10,000 less a credit for taxes paid by Ford’s subsidiary in Canada. (The current American Corporate Tax rate is higher than the Canadian tax rate so is usually more tax to pay).
  • No longer! Under the proposed business taxation rules Ford will not be taxed at all on the $30,000 earned from Canada.
  • So, this encourages American made products to be exported.

IMPACT ON CANADIAN PRODUCTION OF FILM AND TELEVISION

The impact on Canadian film and television production in the short term could be big. Let’s say that the cost of film/TV production in Canada is approximately $1.5Billion per year, conservatively. If none of that could be construed as deductible against revenues earned in Hollywood, I’d say that there would be some worried Studio executives. In the longer run I expect that the US Dollar will get stronger and stronger when compared to the Canadian Dollar. So, less and less of that missing tax deduction will be missed by Hollywood. However, nobody likes to pay taxes, which may cause Studio Executives to produce in America regardless of favorable exchange rates. Indeed, these GOP corporate tax proposals would discourage production anywhere else in the world, not just Canada.

DESTINATION BASED CASH FLOW TAX – (Term Used by Economists)

The buzz word for this corporate tax proposal is Destination Based Cash Flow Tax, or DCFT for short. Economists love eye-glazing terms. They can’t help themselves. I mention it only because you may hear the term and when you do you won’t dismiss it as another Economist’s wet dream. My take on it is that the offshore revenues and the offshore costs of production are eliminated from the corporation’s taxable income. Theoretically, this will help production in America, increase jobs and mess with foreign countries production – which will create a howl of protest from various concerned parties.

EVEN THE WASHINGTON POST LIKES IT

If you’re interested, you can read the source document here. Or, the Washington Post’s review – surprisingly good given that they usually hate anything Republican. Here’s a quote from that article:

“It gets complicated, but the upshot is that the cost of imported supplies would no longer be deductible from taxable income, while all revenue from exports would be. This would be a huge incentive to import less and export more, significant change indeed for an economy deeply dependent on global supply chains, and which routinely runs an overall merchandise trade deficit. Meanwhile, the plan would discourage companies from shifting earnings to subsidiaries in low-tax countries and encourage American and foreign companies to operate within the United States.” Washington Post, Charles Lane, Dec 21/16

WHERE WILL THE “RUN-BACK” PRODUCTION RETURN TO?

It would be cool to see any productions coming from Canada and overseas arrive in California. Also, Ohio and Mississippi both have very good tax incentives and don’t appear to have exhausted their crew-talent pools. The usual other film and television production centers are currently working to capacity, or close to it.

CONCLUSIONS

At the time of writing this blog the proposed Corporate Tax Reforms have not been passed yet; indeed, it hasn’t even been fully fleshed out for debate yet. There are big players opposing it – like the oil barons (think Koch brothers) and the Walmarts and Targets who make huge profits by buying cheap offshore stuff. At any rate it’s worth investigating for yourself and discussing it with your local guilds and unions, both in the USA and in Canada. It has the potential for a boom in film/TV production, as well as all manufactured products – and all thanks to the GOP! Whoda thought?

Cheers / John

References:

The Tax Foundation: June 30/16 http://taxfoundation.org/blog/house-gop-s-destination-based-cash-flow-tax-explained

Forbes: Jan 3/17 http://www.forbes.com/sites/danielmitchell/2017/01/03/concerns-about-theborder-adjustable-tax-plan-from-the-house-gop-part-i/#23da766364ed

Forbes: Dec 8/16 http://www.forbes.com/sites/beltway/2016/12/08/border-adjustability-is-already-fueling-tax-reform-controversy/#46e8220142bb

 

 

 

 

 

Event-University of New Haven,Nov 12/16

Above-The-Line Budget

Above-The-Line Budget

A friend of mine, Tom Garrett, is the Chair of the Film/Media Department at the University of New Haven. His mission is to have his students get REAL, well-rounded education in all facets of filmmaking. Having produced over a dozen movies himself, he knows what it takes to produce films, and he is passionate about having professionals impart their experience to his university’s students .

The Purpose of the Event

This event is a different view of how students can land, and keep, a job in film/TV production, followed by a talk on how business students, accountants and CPA’s can fit into the Film Industry.

Part 1: (Sat. Morning of Nov 12th) What Producer’s Want From Film School Students. This discussion will give the students familiarity with pertinent forms used everyday by crew, as well as ideas on how to find, and keep, jobs in the film industry.

Part 2: (Sat. Afternoon) The Business Side of Film & Media. The Film Industry is generally a closed industry. We open up for viewing the business terms and practices used by Producers, Studio Executives, Financiers, etc. throughout the industry. If you want insider knowledge, then this is the place. Several example documents will be issued as a guide.

The Mix of People Attending

In my last event with Tom there were a mix of filmmakers, documentary producers, distributors, accountants interested in the business, under- and  graduate students. Tom has made many contacts since graduating from the University of New Haven over 35 years ago! So, it will be interesting for both production people to attend as well as accountants, bookkeepers and those just interested in filmmaking.

About the Main Speaker – JOHN GASKIN

John Gaskin has been a Film Production Accountant for over 30 years. He has worked on 55 feature film and television projects of every size in 6 different countries. John has worked with such greats as Ron Howard, Frank Oz, Guillermo del Toro, George Clooney, Meryl Streep to name a few. His book, “Walk The Talk” is used in some universities, and is a favorite of Tom Garrett’s who has used it consistently in his courses since 2012.

More About TOM GARRETT

Tom is a flamboyant character who was described by one of his many admiring students as “Pulp Fiction meets Reservoir Dogs”! Tom drags any student who is willing off to Cannes each year, and he sweet-talks his many contacts into  speaking at his university (wherever that may be, since he’s been a professor at U of Tampa, and Sam Houston University as well). All that is happening while he is involved with the multiple film festivals.

Cheers! See you there!

John Gaskin

 

 

The Three Key Areas of Film Accounting

Film Accounting is somewhat of a mystery to outside accountants. There ARE film industry specific practices that separate film accounting from other industries; however, anyone can learn the three key areas rather quickly, and have a lot of fun at the same time.

There are three basic areas to address, preferably in a hands-on workshop:

1.THE FINANCIAL AND ACCOUNTING CONTROL POINTS

6basicfunctions

6 Basic Functions

There are key accounting control points that are standard throughout any film or television production. I have found a workshop environment to be the best way to learn the workflow and processes, pointing out the control points as we go along. There are typical forms, templates and rules followed in film production accounting. You will be able to take home standard templates and forms used throughout the industry every day. Also, flow charts help as a later reference when you start applying what you’ve learned.

2.THE FILM BUDGET AND THE “COST REPORT”

The Film Budget and the Cost Report issued during any film or television production are

the career maker/breakers for any film accountant or producer. You should have an understanding of how to present, read and manipulate both the Film Budget and the Cost Report, something so important to their career as a producer. (The “Cost Report” is the vernacular for Financial Statements in film production. It is confidential at all levels. This workshop may be the only place you’ll be able to learn how to produce it).

3.CASHFLOW REPORTS AND FILM TAX CREDIT ESTIMATION

An emerging producer, or a film accountant, who can prepare a weekly cash-flow schedule from the budget, as well as a reliable estimate of the tax credits expected, is far in advance of other emerging producers in the same pool. A first step is having typical templates commonly used in the industry to create the cashflow schedules and the tax credit estimates.

REAL SITUATIONS

Within these three areas I convey as many real situations as I can, throwing in examples of fraud and how to control it, how the industry is different/similar to other industries, as well as my real experiences with celebrities like Ron Howard, George Clooney, Steve Martin, etc. There are other areas that I get into given time, including how to find work in the film production industry, both as film accountants, and as a services the CPA can perform in the industry.

FILM ACCOUNTING WORKSHOP 101

My next Film Accounting 101 workshop is coming up in Chicago on Oct 22nd and 23rd. Step 3 above is not gone through in detail, but the templates are provided. The curriculum is more designed for those who want to actually work as film accountants. However, the testimonial below from a producer who recently attended reminded me that it is still what many producers want to know about film accounting:

“John Gaskin has an amazing wealth of knowledge that crosses over into various film departments. In his Film Accounting workshop, he outlines the big picture of film financing and production, and then hones in on the detailed accounting procedures. As a producer, the course has given me the confidence to manage larger budgets and communicate with production accountants more thoroughly on different points of financial control. In addition to attending his course, I also read his book “Walk the Talk”, which I’ve recommended to other industry professionals many times. With both formats John breaks down a breadth of complex information in a manner that is clear and digestible.” SR

Come join us at the next workshop. I promise you will NOT be bored!

 

To find out more about the Film Accounting 101 workshop at http://www.filmaccounting.com

Cheers / John

Film/Television Production – Are There Opportunities For CPA’s?

Above-The-Line Budget

Above-The-Line Budget

FILM & TELEVISION PRODUCTION – ARE THERE OPPORTUNITIES FOR CPAs?

The purpose of this article is to point the CPA towards the film, television and commercial production industry. Is it worth learning more about this intriguing industry? Are there opportunities for CPA’s? Read on and you’ll discover for yourself if it’s worthwhile pursuing this industry. From that point you can start to learn more about the specific practices and terminology of Film Accounting.

MEDIA PRODUCTION – DETERMINING THE VALUE OF THE GDP IN AMERICA

For starters, is it worth looking at “Media Production”? From a total dollar value of Gross Domestic Product, I’d have to answer a resounding, Yes! Back in Dec of 2013 the Bureau of Economic Analysis published the first ever analysis of the value of Arts and Culture. They reckoned that Arts and Culture accounted for $504Billion, or 3.2%, of the Gross Domestic Product in 2011. That 3.2% encompasses everything from advertising to arts education to cable distribution and movie production. To give you some idea of how the 3.2% compares to other industries, the Motion Picture Association of America stated that all of Travel and Tourism at that time accounted for 2.8% of the GDP.

I sifted through the published numbers and came up with an approximate value of $273Billion due to various media “production”: cable, network, feature and advertising/commercial production. See my notations on the table below:

BEA-13-58 Media Production

BEA-13-58 Media Production

 

MEDIA PRODUCTION – PER BEA ARTS/CULTURE CONTINUED TO INCREASE IN 2013

On February 6, 2016 the Bureau of Economic Analysis published statistics for 2013 in their document #BEA 16-07.  Here is a quote from the bottom of the second page of that report: “… total inflation-adjusted spending on all arts and cultural commodities reached $1.1 trillion in 2013. That figure was up 2.7 percent from the year before.”

Here’s another shocker for you. It’s a quote from the top of page 4 of the same report: “Employment for all arts and cultural industries totaled 4.74 million in 2013.”

Enough said. There’s plenty of energy in them ‘thar hills!

FILM ACCOUNTING & AUDITING – A NEW SERIES OF SELF-STUDY CPE COURSES

What is the the cycle of the film industry? How does it go from point A to point B? What really is a film producer and how does he/she need help from CPA’s? What are the common accounting practices and terminology used in film and television production?

The “Overview” course is a 2 hour self-study course which has been very well received, as has been the other courses for those wanting to dig deeper into the nitty gritty (Basic, Intermediate and Advanced).

Watch the video above to see how the course works and it’s content.

VALIDATED MATERIAL AND DELIVERY BY TESTIMONIAL AND CERTIFICATION

The courses have been validated by 4 years of workshops, CPE Sponsor licensing, and numerous testimonials. For more info  SEE THIS LINK.

Some Testimonials:

“We have not worked much in the film industry or film tax credits so thought it would be prudent to get a good foundation. Quite frankly, I did not realize how important it was until I took the first of John’s (self-study) courses. We have a wonderful audit department and plan to look into film auditing to add to our services. I am intrigued and enjoy the nuances of film accounting.” E.E.

The film cycle was especially helpful it IS unique to the industry.” T.S.

The course is a great presentation for an overview.” Z.K.

“I felt the objectives of the class provided good insight into the state film tax incentives and the requirements varying by state, and what the qualifying expenses incurred were.” J.B.

Cheers,

John


ABOUT JOHN

The courses are designed and delivered by a film production veteran, John Gaskin, with experience on over 50 film and television productions in 6 different countries over the past 30+ years, as well as 6 years experience as an instructor in film accounting & auditing,  and managing film budgets. John Gaskin has worked with such greats as Ron Howard (twice), David Valdes (Open Range, Green Mile, Unforgiven), George Clooney (Confessions of A Dangerous Mind) and Gulliermo del Torro (Mama).

For more information, 3 minute videos, course samples, etc. SEE THIS LINK.

Indie Film Production Or Network Television Production

Film Production

Film Production

There was a time when I couldn’t wait to get out of television production and into feature production. Feature productions paid better, the funding was available, the working conditions were much better, the Above-the-Line cast had the “cool factor” that TV just didn’t have at all. That was the 80’s and 90’s. Now flip to 2016. The tables have turned completely.

THE BLOCKBUSTER MODEL

After 2006 it had been getting harder and harder to land feature production work. Since 2008 the number of feature films produced in the $25Mil to $50Mil range has been cut WAY down. Those kinds of feature funding models died with Blockbuster. Instead the features are either the rare “Tent-Pole Films” (gargantuan productions in excess of $100Mil), or stripped down to bare bones in the range of $7Mil to $19Mil. The high risk makes the money scarce, and it makes the job of the Line Producer and Film Accountant much more difficult.

INDIE STYLE FILM PRODUCTION

What I had been left with is the Indie Feature Film production. These lower budget feature productions are often usually backed by a distributor with some % investment, or at least a promise to distribute, with the rest of the money arriving Indie style – bank loans on tax credits, borrowings against overseas pre-sales, loans against trusted distributor sales projections, foreign partners, etc. All of that “noise” makes it difficult for the Line Producer and Film Accountant to stay on track.

  • ATL: Indie feature film productions are often top-heavy. The funding model needs prediction, and the only prediction possible is with a big name “Star”, or at least a well recognized name. (Note sometimes a big name Producer or Director will draw as well – witness “Mama” when  Guillermo del Toro attached his name as Producer.) That usually costs a big chunk of your budget.
  • OTHER: Indie feature films are ALWAYS bottom-heavy – that is, the “Other” section at the bottom of every film budget. This is the section that includes the the bank flat rate charge, loan interest expense, legal fees to the lender, legal fees for the producer, Bond Company fees, development costs, etc. I once asked a bank loans officer, how she determined the flat rate amount that the bank was charging us just to be able to get a loan (this is before interest charges). She said, “Frankly, I charge as much as I can.” For a $9 or $10Mil production, you can expect this section to ring up a total of about $900,000 on an Indie feature film.
  • MANAGING THE CASH AVAILABLE: There is also the cashflow factor – the cashflows are predicted ahead of the time, on a weekly basis, based on the film budget. The bank and the bonding company lock in the cashflows based on that schedule. If the cashflow is wrong, or if spending goes over budget, you find yourself in a situation of spending all your cash as soon as the allotted amount of weekly cash is released by the bond company/bank. Woe to you who can’t meet payroll one week – it’s a very noisy time.
  • BTL: Finally, the only part that most of us got in the ‘Business to do, is the actual production of the script with the Below-the-Line crew. By this point a good chunk of the cash has been allocated to the ATL and OTHER sections, so you may need to hire some inexperienced crew just to keep the costs down.

NETWORK/CABLE TELEVISION PRODUCTIONS

For the past 4 years I have been working on Cable and Network television productions. I’ve never been treated better, the pay is comparable to feature production, the “cool factor” is definitely possible if you’re on the right production, and, most importantly, the money is available! This is an experienced Line Producer’s and Film Accountant’s dream come true.

  • ATL: Network Television generally doesn’t go crazy offering big bucks to “Stars” although the money is still VERY good. The big names are more willing to do television now, witness Woody Harrelson and Matthew McConaughey appearing on True Detective. The cast deals are in place episodically, with pick-up options if the series is picked up for another season, so Line Producing and accounting for ATL is a no-brainer.
  • OTHER: This nightmare of legal costs, interest charges, bonding company fees is borne by the Network, and doesn’t become an issue for the Line Producer or Accountant. Again, it’s a no-brainer.
  • MANAGING THE CASH AVAILABLE: Cash is very important to the studio, so there is also a cashflow prediction system in place. It’s generally a task assigned to the Film Accountant and is prepared according to the studio’s requirements with their pre-formated Excel templates. This task is not even on the Line Producer’s radar. Usually, if the cashflow has been wrong, the studio is forgiving and sends the necessary cash as needed, avoiding the problems of not meeting payroll, etc.
  • BTL: The only downside to working on Network Television Production is that the experienced crews are so busy it’s difficult to keep them together from one season to the next. The Line Producer and Film Accountant need to be on their toes budgeted and shooting  2nd units to complete the types of scripts that are being demanded by the studios.
  • NETWORK/CABLE INTERNAL AUDITS: The only downside to the Network/Cable TV productions, is the seemingly endless list of rules and regulations enforced by their Internal Auditors. Once you buy-into the rules, and have a familiarity with them, the crew settle down and follow them voluntarily. It’s up to the Line Producer and Film Accountant to get the crew to that point, which is not always an easy task.

IN SUMMARY

The times have changed and television production is where it’s at. The funding models are there and the duties of a Line Producer and Film Accountant are in-line with what we like to do – produce scripts.

The Indie world is probably more rewarding to the Producers, and in some cases, to the talent; however, if you’re not working with well known names, like the Coen brothers, then most of your time will be spent wrangling finances so as to keep the production afloat. So, if you’re not looking for awards, I’d recommend getting back into, or staying with, television production.

 

Cheers,

 

John

Check out my new Film Accounting 101 workshop in Chicago at http://www.talkfilm.biz 

 

New Adventures

I  finally have my Green Card. It’s been a long trip, with multiple diversions along the way.

WORK VISA’S ARE PROGRESSIVELY HARDER TO GET

Back in 1988 I looked at moving to the US while I was on a film production in Orlando during the winter. I enjoyed working on film projects in many areas of the USA and looked forward to returning someday permanently.

HOLLYWOOD AND NYC ARE STILL THE BIGGEST PRODUCERS

I was based out of Toronto, and busy with film productions; even though the busiest film and television production were in California and New York (currently followed by Georgia and Louisiana).

MY WORKSHOPS HAVE KEPT ME KEENLY AWARE

Because I have worked in 6 countries, and in 5 different US cities, working anywhere in the USA is not a hardship for me. Also, delivering week-end workshops on US Payroll and Film Accounting throughout America has kept me keenly aware of the US film and production scene.

LOOKING FORWARD TO NEW ADVENTURES

Now that I have my green card I look forward to contributing and sharing my hard earned skills  with you here in the film arena.           New adventures are definitely on the horizon.

 

Cheers / John

Visit http://www.filmaccounting.com for current workshops planned.

 

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