By Nancy Vialatte - Posted date: May 11, 2007
In a move to turn backend points into cash, Mark Cuban and Todd Wagner are backing a new company that could help film and TV professionals collect on their net or gross participations.
Variety reports that the two are involved in Content Partners, an outfit started last year by Steve Kram and Steven Blume. The aim is to bridge the gap between the time that actors, writers, directors and producers are granted points and when they actually see their first checks.
The idea is to buy out the profit-participation stakes held by individuals in order to assemble a portfolio of properties that in aggregate will generate a steady stream of income.
Through their experience in helping to manage the profit-participation rights of high-end clients, Kram and Blume realized there was a demand in the creative community for a company that would provide participants with lump-sum payments for stakes that otherwise might not pay off for years.
Kram and Blume drafted a business plan and made a proposal to Cuban and Wagner, based on their reputations as innovators and risk-takers. The duo behind 2929 Prods., Magnolia Pictures and Landmark Theaters, among other showbiz concerns, bought it in the room, so to speak.
"I think it's a unique opportunity," Cuban told Variety in an email. "The creative community faces the challenge of not having predictable cash flow. (Content Partners) solves that problem by buying participations and equity from individuals. It's a win-win for all involved."
During the past 12 months, with $100 million in funding, Content Partners has cut deals with dozens of profit participants in everything from vintage TV shows to movies released during the past six months. Kram, who is prexy-CEO of Content Partners, declined to name any of the people with whom the company has done transactions, citing confidentiality agreements, but he said Content Partners' portfolio now includes properties owned by Universal, Fox, Warner Bros. and Sony Pictures, among other major production entities.
"We're allowing creative people to have much more certainty in their financial future. Our service allows them to better plan their financial lives, and in some cases, we give them the freedom and the funds to pursue their passion projects," said Kram.
In assessing the value of a profit participant's stake, Content Partners runs the numbers and comes up with detailed long-term projections for a property's potential in all manner of venues and formats -- from international TV sales to remakes and sequels to the potential for DVD re-releases, etc. -- and ancillary markets a la licensing and merchandising. In some cases, profit participants want to hedge their bets against the possibility of a future bonanza by selling only a portion of their stake, Kram said.
Once they buyout the profit participant, all future coin generated from the stake, or portion of the stake, flows to Content Partners. After that, the responsibility for monitoring how the studio or copyright holder treats the property and deciphering studio income statements belongs to Content Partners.
Making such long-term bets means that there's genuine risk involved for Content Partners as technological changes are rocking the industry and there's no telling what the long-term value of individual movies and TV shows may be, noted top legal eagle Martin Singer, who said he's had several clients cut deals with Content Partners. There's an important comfort factor, however, in that Kram and Blume have solid reputations and long-term professional relationships with the town's top talent reps.