Royalty Week - June 19, 2007
Coffee with Steven Blume
RoyaltyWeek recently sat down with Steven Blume, co-founder of Content Partners, LLC. Content Partners, whose team includes Mark Cuban and Todd Wagner, purchases profit participations in feature films, television programming and music. Prior to founding Content Partners in 2005, Mr. Blume was the CFO of Brillstein-Grey Management for eight years.
RW: What is the general concept behind
Steve Blume: Content Partners was founded to create a new market to provide liquidity, certainty of amount, diversification, and audit and administrative services to holders of passive profit participations in feature films, TV series, and music projects.
RW: What characteristics do you look for when investing in a profit participation stream?
Steve Blume: We look for projects that have recouped their costs and guarantees and are currently paying profits. Our focus is on TV and film and to a lesser extent music. Editor's Note: The Content Partners website states CP will purchase 50% to 100% of a revenue stream – with a total investment up to $25 million.
RW: What valuation methods do you typically use?
Steve Blume: We value participations based on a projection of the future cash flows discounted back to present value to reflect the risk associated with the likelihood of achieving these cash flows.
RW: How is video revenue typically treated with regard to profit participations?
Steve Blume: Video revenue is typically included in gross receipts at a royalty rate of 20% of wholesale sales and then the video residuals paid to the various guilds/unions are deducted in computing adjusted gross receipts.
RW: How is new media revenue iTunes downloads, etc. - being handled?
Steve Blume: Any and all revenue received by the distributor from new media should be included in gross receipts. The studios have not yet developed their accounting systems to account for these new revenue streams so this accounting is in the early stages of its evolution.
" Content Partners is a talent friendly company which seeks to create a product which meets the needs of its clients."
Editor's Note: The Content Partners website is located at contentpartnersllc.com.