While we have the talent, facilities, locations and crew, former Village Roadshow Entertainment Group co-founder and CEO Greg Basser believes the one thing that has always hindered Australia from becoming a true global player is “a deep, consistent source of funding” to help cash flow production.
Basser hopes to change that, with his company Australian Entertainment Partners (AEP) launching a screen fund in partnership with funds manager GSFM, which will invest in film and television projects made in Australia. It plans to raise up to $100 million of equity to be coupled with a bank facility of up to $500 million.
The fund will run for seven-years (five years with a two-year wind down) and be capped at producing 40 original productions, increasing to 55 total projects including sequels and continuing series.
Australian Entertainment Partners was established by Basser with former Miramax COO Bob Osher and former Paribas global head of media and entertainment David Burdge in 2022, and is based in Melbourne with a representative office in Los Angeles.
Basser tells IF they decided to launch the fund after witnessing the upswing of production in Australia through COVID, bolstering the country’s reputation internationally, combined with the shift that has seen streamers and studios buy product on a cost-plus basis.
“It’s all very well to have anything up to 50 per cent of your spend picked up by incentives and rebates, but there’s still the challenge of ‘How do I fund the balance?’ And if it’s all on a risk basis, in Australia banks and investors were very wary of taking that risk.
“So seeing the paradigm change in the industry, we thought here’s an opportunity for us to add what I consider the final leg to getting the Australian industry as a full participant in the global industry. We’ve certainly got the creatives, the writers and the creators, to create IP for global audiences. For me, that’s a very important goal because I think we’ve always had that capability, but we’ve had difficulties in getting to the market.”
The hope is to leverage Basser and Osher’s experience in both Hollywood and Australia within the financial investment community to raise funds, and then to lean on their industry relationships to both attract international productions to Australia and to encourage studios to invest in Australian IP that has global appeal.
The fund will be structured in such as way so that it has no material exposure to box office or other audience-related factors, which Basser argues makes it low-risk. Rather than taking an equity stake, the AEP Screen Fund will finance projects entirely, less rebates and incentives – essentially then selling them to a streaming service or studio on completion in a way that covers the net cost and a predetermined margin. “For a producer, that’s nirvana, because if you if you know that you’ve got the money and the buyer knows you’ve got the money, you’ll get much better terms when you sell your product.“
The investment criteria for the fund is that a project is made substantially in Australia, and is able to attract a minimum level of rebates. For instance, offshore productions must spend the amount equivalent to the Location Offset QAPE (Qualifying Australian Production Expenditure) threshold, which with the recent lift to 30 per cent means $20 million for feature film or $1.5 million per hour for series.
When IF speaks to Basser, he is in LA taking meetings about the fund and he notes there is already “a very strong desire to participate”.
“You will have people bringing, like we’ve had over the last couple of years, productions for the global marketplace that are not Australian. That’s what the Location Offset’s there for, but we will also, as a direct result of that, be introducing Australian creatives into the mix. My goal will be to say, ‘Well, why don’t you use an Australian writer and/or an Australian director?’
“We hope that as part of this we will be able to connect Australian creatives better with Hollywood and the global community so that our creators have a stronger voice.
“[The studios are] also interested in now looking for original IP out of Australia. So we’ll be able to help those producers in Australia that are creating IP that does have a global audience… with a pathway into the top level of buyers or distribution on a much more level playing field. As I said, when you walk in the door and the thing’s been fully funded, that makes a huge difference to saying ‘I can’t even write a script without your money’.”
While Basser concedes the fund will have a slant towards internationally-generated projects to begin with, he’s hopeful, given international interest in Australia and the Federal Government’s plan to require streamers to invest in local content, that ultimately around 40 per cent of the fund’s investment will go towards projects that qualify for the Producer Offset.