The Draw of the Entertainment Industry: What Inspires New Investors to Enter the Fray?

November 9, 2012
By

The entertainment industry is one that requires a tremendous amount of passion, patience and an enormous amount of luck. Thousands of projects are developed each year and only a handful get made and distributed. What continues to draw successful people from other industries into the film business? What drives them? What is their approach to success?

I sat down with entrepreneur Timothy Christian based in Omaha, Nebraska and discussed his inspiration to take on the industry headfirst.

Kathryn Arnold: You represent yourself as a serial entrepreneur, what is your background?

Timothy Christian: I’ve been able to work closely with several media and tech companies in a business development capacity. I’ve also started 2 companies of which I am very proud: HYPE UniverCity – an online company geared towards the college market, providing select students with scholarships to pay for school and books. We gave away $1 million. And my other company, Omnimedia Worldwide Ventures, raised $250 million in equity for different tech and media companies: Cloud Cover, a data security company ($10 million) Hub Garage, geared towards automotive enthusiasts ($7 million) and a variety of tech companies.

All the monies were raised through my network of equity investors.

KA: With the success you had in philanthropic and tech ventures, what drew you into the film business?

TC: My first foray into the film industry came from my background in music. I started in the music industry working for Teddy Riley for 3 ½ years in business development as a liaison to Interscope Records: Michael Jackson on the Invincible Album and Blackstreet among others. I’ve always loved music, but it’s too fickle an industry for me. So film came about when I was raising investment for another company, and I met some people who asked me to help them raise money for film. From there, I decided I liked the industry and wanted to raise some money, but not on a picture-by-picture basis, but for a fund…and then I went out on my own.

KA: What inspires you/attracts you to the industry?

TC: Entertainment is a way to influence people – from music to publishing to film – some or all of those things impact all our lives. The film industry is an opportunity to be creative and tell stories that have a positive influence on people. Film is also a way to cross promote and cross brand other things I am doing. I can introduce a musical artist as an actor or actress or do product placement, or promote the causes I believe in. That type of cross promotion is important.

KA: Where are you based?

TC: I’m based in Omaha, Nebraska. However I have a team that is in LA.
Ulysses Curry (CFO), Exec VP Rab Butler, and Ryan Johnson (formerly with Mandalay Pictures). Everyone is full time on salary.

KA: What collateral did you use to raise those funds?

TC: We don’t have collateral per se. All of the money came from people that I have worked with in the past. We had some projects that were indicative of the types of films we’d like to do. And we committed to packaging A list cast, and an A list director with a great script in a budget range…. We didn’t raise money on a particular slate, as we didn’t want to get locked in to certain films that would pigeon hole us.

KA: What timeframe do your investors expect a return on their investment?

TC: We were very honest in terms of how long the process would take and that they shouldn’t expect money to come back for at least 12 months, but more likely 12-18 months. They were okay with that, because we plan on providing gap financing, bridge loans, and other financial vehicles that will yield a much quicker return than just financing a film from scratch. We can turn around bridge loans in 90 days, so we’re implementing a combination of investment choices to satisfy our investors’ need for an ROI.

KA: Was it hard to convince them to invest in an industry that has so much volatility?

TC: What helped, is that our investors are not film industry guys. They don’t know much about film, but they know a lot about financing. And we presented them with a portfolio model that they trust, and they have given us the freedom to run the company the way we see it in order to be successful.

KA: You’ve gathered an impressive list of partners/advisors at Night Fox Entertainment. How did that come about?

TC: Ulysses was referred to me through one of my private bankers in NYC. He was in the process of taking a very high-ranking job with a bank, but that was boring. When I spoke to him about what I wanted to do, he was on board with going with us, because it was a bigger challenge.

Ryan I met in LA, referred to me by another mutual acquaintance. He was just getting ready to go over to a well-known production/distribution company in NY, but he chose to come with me instead. They believed in me and we’ve created a great relationship.

KA: What is your financing model?

TC: We’re going to do movies we like, but we’re not going to take any huge creative risks. We are going to look at it very much the way the bank would look at giving someone a loan. In terms of a model, we only want to finance films where we can secure 35% of the budget in Domestic pre-sales, 25% in tax credits, 75% International. We’re covered 100% in foreign and tax credits alone, and have a little bit extra if we pre-sell Domestic. (Best Case) In the worse case, we’ve got cash and we can use that as need be. But we’ll only spend up to $8 million in cash. That would be defined by how many pre sales and tax credits we have that make up a strong percentage of the budget.

KA: Are you focusing on a certain genre?

TC: Action, thrillers, some dramas, comedies if they’re right, horror if they’re right.

KA: Is Diversity something you’re thinking about?

TC: Of course it’s something we think about, it’s a combination of wanting to provide opportunities to people who aren’t getting it, and also we want to make it organic to the product.

KA: How many projects do you have in development now?

TC: We’ve got 5 in active development. “In the Shadow of Wings” is closest to going into production: We have an A list director and offers out to cast, pending financing the film. We’re partnered in an equity play with another company to cover the full budget.

KA: Do you have a sweet spot in terms of budget?

TC: With $12-15 million you can do great things. But we’re definitely looking at lower budgets as well.

KA: With your negotiation skills, how do they apply to the entertainment industry?

TC: Financing films and financing companies is very similar. I may even be at a disadvantage in terms of there is a lot to learn in the film industry. I have a great team that is helping me negotiate.

KA: What contract elements are important to look for?

TC: What I’ve found is everyone believes they have the biggest star attached and everything is perfect. For me it’s a matter of digging through the nonsense and figuring out what you really have. Once you know you have the elements, we always want to make sure we’re really high up on the totem pole to recoup our money.

KA: What is your distribution strategy?

TC: We’re looking at distribution on a case-by-case basis. We have a very solid strategic relationship with Relativity Media, (they’re distributing now.) And with our advisory board, we have a lot of contacts to help navigate that distribution model. It will depend on how involved we are in that particular film, whether we bring those relationships to the table.

KA: Are you working with the studios?

TC: Studios are a piece of the puzzle in our financing strategy.

KA: Are you working with Foreign Sales Agents?

TC: We’re working with Nicholas Chartier at Voltage, who came to us through Ryan (Johnson.) All our guys brought great value to the company through their relationships.

KA: I wish you great luck Timothy. You’re off to a tremendous start for someone relatively new to the business. I’ll be rooting for you!

TC: Thanks Kathryn

For more information on Timothy Christian and Night Fox Entertainment, please go to www.nighfoxent.com

For information on me, Kathryn Arnold, please go to www.thentertainmentexpert.com

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