Seven Arts Entertainment Inc (SAPX)

[lowhangingfruit]

of debt...

in a world of massive joy, where Di Bonaventura gets a 150% box office return (more or less his modal retun over the 28 titles on his slate so far - one mega win, mostly small wins, a few losers) let us say as follows (very rough numbers, links at bottom, or you could subscribe to AFI info or ScreenDigest):

$ 60m production budget
$ 40m P&A budget
$100m total budget

$150m box office
$ 75m returned to studio

$ 25m DVD/Blu Ray sales
$ 16m returned to studio

$ 50m TV sales worldwide (inc: online/VoD/Airlines)
$ 40m returned to studio

So, the income to the studio is now $75m+$16m+$40m = $131m
A "profit" of $31m

BUT (before we party on, dudes)

Our stars and agents and so on are all in for residuals and participations, taking about 40% of the "profits" (call that $12m) and interest on $100m has cost us 18% P.A. on about 60% of it, for two years that is around $21m. $12m + $21m = $33m of costs to come later.

Oh, crapola. We failed to make a profit after all. Dudes. Downer.

Worse than that, we had to fund the interest up front, but the revenues come in over a long period

theatrical - 0 to 1 years
DVD - 0 to 5 years
TV - 0 to 20 years

So, even with this talent, the movie is going to struggle to lift the P&L in the next few years, if ever.

What we need to lift the pps is a team that can do a movie that will return $200m+ at box office. reliably. Which needs a budget closer to $200m + $100m of P&A, and a top line studio name to push it out. And only 270 odd movies have ever done that in the whole of history.

And it is because most of the large investors know the real economics of the movie business, that they are not going to buy this stock on this news.


http://www.edwardjayepstein.com/TVnumbers.htm

http://www.the-numbers.com/movies/records/budgets.php

http://www.scribd.com/doc/5885934/How-film-studios-make-money