Financing Film:The Budget Question (Pt 1)

Duncan Payne, Sales Manager at WTS, shares his vast knowledge of financing and the broadcast industry in an exclusive interview with Regional Film & Video...

RFV: With your wealth of experience in the Broadcast industry from Mitcorp, Charter, Fineline and now WTS, you have the distinct advantage of approaching this subject from many different angles. In your opinion, before deciding on investing in expensive pieces of equipment what are the most important factors to consider?

The key question to ask yourself before investing in expensive new equipment is: “Do I have confirmed demand from customers for this product?”. If your clients have no interest in the format you use, you have the luxury of being the master of your own destiny - buy whatever you feel gives the client what they want and gives you the best workflow and ease of production. More often in Broadcast circles though, formats are dictated and every broadcaster requires something different. In these cases, hire is an option. Hire companies can be invaluable in providing a range of high quality equipment, and the service provided can be a real asset to a production as it usually includes technical back up and support.

With the technology in this industry moving at break neck speed, is it advisable for production companies to hire as opposed to tying up precious cash reserves on buying equipment?

If the contract is long enough and lucrative enough, then make the investment and buy it. If you’ve had consistent demand for a particular format, then buy it. If you are sure that the second-hand value of what you are buying new is really strong, then buy it. For example, second-hand Cooke lenses often sell for more than new as the lead time can be in excess of 18 months, so there is no risk in investing, particularly if you have financed them to protect your cash-flow. You could conceivably buy a set of prime lenses, use them for a couple of years and then sell them for as much as you originally paid.

Does a limited budget necessarily mean limited possibilities? Does it make it more difficult to gain access to top quality equipment?

The picture quality from the current crop of handheld cameras is staggeringly good. Often 2nd camera footage shot on a supposedly lower spec camera is indistinguishable from the main camera. It really comes down to the skill of the cameraman to light and shoot it properly. The more you spend on a camera the greater flexibility you get in terms of dynamic range and light sensitivity, but if you have control of your lighting conditions and shooting environment and your camera operator knows what they are doing, you can still achieve excellence with a lower-cost hand-held. Don’t be afraid to look at second-hand equipment, either. It’s obviously less expensive and, if bought from a known and trusted dealer, can allow you to use a higher spec camera without breaking the bank. Finance companies are happy to finance used equipment too.

What is the difference between using high street banks or less specialist sources of finance rather than finance companies who specialise in Broadcast?

You’re much more likely to get a “yes” from a specialist, although it does depend on the type of kit. General funders like the high street banks don’t know their PDWs from their BMWs; it’s just a code and a price. They have no knowledge of the industry so don’t realise that there is a buoyant market for second-hand equipment. They perceive the risk as high. A specialist funder knows the resale value so they realise that there is fairly low risk with broadcast kit generally. Software based purchases such as editing equipment can be more tricky to fund, but a strong business can get funding approved on most assets. In my time at Fineline our decline rate was tiny. The specialist finance companies can also offer the subsidised manufacturer deals such as the 0% deal currently on offer on Sony F series cameras and new monitors.
I always found that cameramen and industry people generally like when a “finance guy” knows one end of a camera from the other.

Is it better to buy local or take a risk buying from an international buyer at a cheaper rate?

The industry can get a bit blazé sometimes when a new camera is “only” £5K or £10K. That’s still a lot of money! With so many counterfeiters falsely branding product, there is a huge risk that you won’t receive what you expected. There has been so much equipment stolen in recent months that you could get caught up in world of pain buying equipment that the seller doesn’t own. Warranty is also a major issue, particularly with cameras. They are electrical; they will go wrong, so a two-year warranty is a huge consideration. I maintain that having a strong and trusting relationship with a mainline dealer is the way forward. A loan unit delivered on a Friday afternoon when your unit fails on a job is worth its weight in gold.

Read the article in the online edition of Regional Film & Video here.