Investors looking for high return investment opportunities in mutual funds, hedge funds, or limited partnerships can participate in a top alternative investment in the convergence of media & entertainment sponsored by Noci Pictures.
Private equity firms, family offices, venture capital, sovereign wealth funds, and ultra high net worth investors are now the principal backers of most films that Hollywood studios are releasing. Even some of the early content of Netflix such as “House Of Cards” was financed through private equity investors.
“Historically, investors were limited to where a movie’s profits would come from that was based on theatrical, video, and DVD”, adds Yuri Rutman, Managing Partner of Noci Pictures’ private equity fund. “But now its a level playing field with the explosion of Video On Demand, OTT, SVOD, along with hedging strategies that can get investors back a majority of their invested equity prior to revenues”.
Noci Pictures is now putting together a large private equity opportunity that it has opened up to affluent high net wroth retail investors as well as institutional investors.
Noci Pictures’ business model is structured on having a more transparent and risk minimized organization that gives investors a privileged opportunity to invest in media & entertainment deals.
“The convergence and growth of theater screens, digital distribution, video on demand, and risk minimization strategies is proving to be a superior business model on the evolution of a 100 year old industry vs. a lot of investors who are spreading their risk across many startups hoping for a lottery ticket win”, adds Rutman.
Sophisticated retail & institutional investors can request a Pitchbook or business plan by filling out an investor suitability questionnaire at http://www.noci.com or contact the company at 310-651-0799
With the Dow Jones, S&P’, and Asian markets continuing their nosedives global financial woes, many affluent high net worth investors, portfolio managers, family offices, and private equity groups are weathering the tumultuous wave of public equity markets and reconsidering alternative investments.
“The definition of insanity is doing the same thing, hoping for a different result”, states Yuri Rutman, head of Noci. “Many investors google for options other than stocks, bonds, mutual funds, and other investments whose performance is tied to the indexes”.
Noci allows qualified investors to participate in the finance of global film, tv, & digital which will be a $2 Trillion industry in 2016.
“Historically investors who were investing in movie deals were limited to just a movie deal and a lotto ticket chance of distribution”, adds Rutman. “With the convergence of technology, film, tv, cable, OTT, mobile, VOD, there are hundreds of options for revenue streams along with a market neutral absolute return prior to revenues using global tax incentives and advertiser co-funding to offset equity risk”.
There are specific models that are in place where investors can see a 60%-100% ROI on their equity prior to profits.
In 2016,Global Media & Entertainment will be a $1 Trillion industry. With the world’s stock markets falling, investors pursuing alternative investments can benefit from the rapid growth of where Hollywood meets Silicon Valley.
Noci Pictures Entertainment, LLC is offering to a limited number of accredited retail and institutional investors the opportunity to invest in an uncorrelated alternative investment that combines film, television, and OTT distribution.”Historically, investors pursuing filmed entertainment were limited to where their revenues would come from based on distribution to theaters and DVD”, states Yuri Rutman, managing partner of Noci. “With the disruption of Hollywood’s monopoly on entertainment distribution there is a new global landscape for entertainment content revenues “.
At the same time, investors who are not educated about the media & entertainment business are plateauing their interests in pursuing stocks, bonds, real estate, oil & gas, and other alternative investments.
“What we are seeing in our dialogue with investors is that their financial advisers or money management firms did not have access to top tier alternatives outside of what they were making commissions on from selling specific financial products” states Rutman. “Further, as many institutional investors and prolific billionaires started backing film & tv companies, there was a limited amount of product that was able to be produced”.
Noci’s business model has an innovative hedging strategy that offsets an investor’s risk with global tax credits, tax rebates, and country specific distribution advances which covers equity positions before revenues.
“It is not only about having a privileged investment in media & entertainment, but its the scalability of being on a film or tv set with major stars, getting executive producer credits, as well as attending global film markets such as Cannes, Sundance, Venice, etc”, adds Rutman.
Alright, so you woke up one day, checked your Swiss bank account, called your family office planner, had breakfast with your private client service wealth manager, got your tax accountant on the phone, and between the three of you, you decided to invest the proceeds from either your CEO severance pay, a recent inheritance you received, or from the cash sale of your startup company to Google, Facebook, or from some other European or Asian conglomerate that overpaid you with a 20X EBITDA and you feel like you won the hundred millionaire or billionaire lotto ticket.
So you and your team of advisers start making a list of all the investment opportunities you can pursue. Stocks, bonds, real estate, some high trending startup on Angellist, an invite-only VC fund or hedge fund, etc. Some of these may seem attractive and are endorsed by their promoters to be safe. But, deep down inside your adventurous and entrepreneurial soul knows that safe is boring, life is short, and binge watching “Breaking Bad” makes you wonder that if a Chemistry teacher can become a meth dealer, why can’t you become a Hollywood film producer?
So after reading an article how the Thompson family of Louisiana banked “Black Swan” and put together a $300 million fund from their oil & gas buddies, or that the 20-something offspring of Oracle’s Larry Ellison (Megan Ellison & David Ellison) are pouring a few hundred million into making movies, or that big name institutional investors such as Waddell & Reed, Accel Partners, Texas Pacific, Lone Star Capital, and numerous others are in this space, you make the official announcement that you too are now looking to invest in films, media, and entertainment.
Now, this may not ring too well initially with your hedge fund manager neighbors in Connecticut, your Silicon Valley billionaire golf buddies, or your oil and gas investor friends in Dallas, but aren’t these the same guys who are financing Hollywood blockbusters? And the only question for you, how do you get in the game without feeling like the Uncle of the film school student who wrote his nephew a $1,000,000 check for a film that starred his theater department classmates and ended up as a free download on a torrent site?
So after doing your share of homework, here’s what you discoverer:
*There are various state, federal, and international tax credits and rebates that hedge equity investments into film in the range of 20%-32%.
*Most successful film & tv productions pre-sell 40%-100% of their film’s budget before production, enabling equity investors to be in the money prior to profits.
*By 2017, media and entertainment will be a $100 billion industry via theatrical releases and OTT & Pay Per View.
*Before Google, there was Altavista, Netscape, and Magellan. Before Tesla, there were hundreds of automotive makes and models. And right now, Netflix & Amazon studios are only two companies, while the studio and independent film distributors have consolidated into less than 10 companies.
So after looking at all the great benefits, how do you actually go about finding a premium opportunity where you are certain that half your money isn’t going to be used to purchase a new helicopter or yacht in St. Tropez?
The key that separates the successful film financiers vs. the newbie Oil magnates & Russian oligarchs who come to Los Angeles with a pocketful of money and end up leaving with half a pocketful of money is called several things: structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and the professional ethics.
What does that translate to you in a real world scenario?
Lets say you want to finance 100% of a $1.5 million dollar low budget genre film whose worst case scenario is a VOD release and profits from international sales and perhaps some other equity sweeteners in the conversion of the securities that you subscribe for as part of the deal. Well, if you write a check for $1.5 million, and the film is shot in a state that has 30% in tax credits, you get back $450,000 prior to revenues. So you are already making a nice return before the profits kick in. Then you figure you sell the film to 50 countries, and if you are really lucky, you sell the film for 3-4 times it cost to a distributor at a swanky festival like Sundance, Toronto, Cannes, etc.
But lets really take this a step further and see how the bigger boys leverage film investing because they can get a bigger star which can translate in larger overseas sales. Lets say a filmmaker/producer has a $10 million film and you want in on the action. You would invest $4 million in equity, receive a 20-30% tax credit or rebate on $10 million which will be $2-$3 million, the producer will get the biggest star he can, pre-sell the rest of the film’s budget, you won’t worry about ever seeing a penny from the theatrical release because you know your VOD, OTT, PPV profits and international sales will cover your equity position. Make sense?
Now leverage this with different budgets, genres, stars, distribution, places where you can get higher tax credits & rebates and other structures to provide you with liquidity, you will have a superior ROI across multiple film & television projects.
If you would like to be further educated on a premium alternative investment opportunity, please contact us at 310-651-0799 or fill out the form below.
The term non-correlated asset classes covers a whole range of potential investments, including venture capital, real estate, private equity, but also alternative investment strategies.
Investing in film tv, and original digital content offers a high yield alternative investment that can be leveraged with tax credits, tax rebates, advertising co funding of content, and multiple sources of revenues including theatrical, video on demand, cable, OTT, mobile, and foreign markets.
As a non correlated asset class, investing in film has outperformed every non correlated asset class in the world if you look at the more than $10 billion dollars poured into motion picture finance deals in the last 5 years, the IRR across the spectrum for both studios and independents are resilient to global economic declines in other industries.
Investors from Wall Street to Silicon Valley to the Middle East to Russia have been parking their money into Hollywood.
Anil Ambani, Larry Ellison Of Oracle, Paul Allen Of Microsoft, Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll (EBAY), Sidney Kimmel Of Jones Apparel Group, financier Michel Litvak, oil magate Tim Headington, fund manager Mark Rachesky, prominent venture capitalist Jim Breyer of Accel Partners are just a small example of individuals behind the finance of a lot of film, tv, and media companies.
Institutional investors and hedge funds investing in film and media production companies have included Elliot Associate, Stark, Columbus Nova, Bain, Honeywell Pensions, Texas Pacific, Arbry Partners, M/C Ventures, and others,
Non-correlated investment strategies can be used by investors to neutralize, or counterbalance, the risk that one, or more, of the investments in a traditional portfolio of stocks and bonds falls in value. In order to do this, investors typically place between 5% and 20% of their total investment portfolio into alternative investments to protect the remainder of the portfolio from downside risk.
Among the spectrum of asset classes targeted by high net-worth individuals, institutional investors, pension funds or private banks, alternative investments are becoming popular offering more diversification to investors’ portfolios. The benefits of such diversification have been demonstrated by Harry Max Markowitz ( 1990, Nobel Prize in Economics ) in the Modern Portfolio Theory. He proved mathematically that an investor can reduce portfolios’ risks simply by holding instruments which are not perfectly correlated – a correlation coefficient not equal to one. By holding a diversified portfolio, investors should be able to reduce their exposure to individual asset risk.
If investors are attracted by alternative investments in their quest of alpha, it is because allocating to alternative investments offers advantages compared with traditional asset classes and diversification to a portfolio though involving a certain level of risk.
As investors have become more concerned about their risk-adjusted returns, especially in bearish market environments, interest in alternative investment strategies gained momentum.
By investing in alternative investments, a portfolio manager or a given investor aims at obtaining performance from the relationships between securities. A non-correlated asset class behaves independently from other securities composing a portfolio. Such investment vehicles allow investors to hedge the risk that an asset falls in value and avoid any snowball effects. One of the main benefits of alternative investment strategies lies in the fact they minimize downside risk.
When educated about properly structuring leveraged film, tv, and media finance which may also include U.S. and international tax incentives to minimize the risk many investors understand that they are not gambling on one film hoping to be bought at a film festival. When a company is looking to finance 10, 20, 40,50, 75 films and OTT television series, there is more than just upside on revenues from each one but a final exit strategy after 5-7 years that can bring 300-400% returns on capital invested.
What we have been discussing for years about media & entertainment being a superior alternative investment to stocks, bonds, mutual funds, and other publicly traded instruments is validated by an Ernst & Young study.
“In 2014, it is estimated that the M&E industry will outperform several major cross-industry stock market indices (Figure 1). The 10 sectors of the media and entertainment industry measured by EY are expected to have a 2014 estimated profit margin of 28% followed by the S&P 500 Index, 27%; FTSE 100 Index, 26%; CAC 40 Index, 19%; DAX 30 Index, 17%; and the Nikkei Index, 14%.”
While this study reflects the growth of more publicly traded media & entertainment companies, the private equity investment vehicles that are structured behind companies such as Time Warner (RATPAC), Newscorp/FOX (Dune Capital), Comcast/Universal Pictures (Legendary Pictures), and many others are still infrastructures backed by private high net worth investors and institutional capital that control the A-Z lifecycle of strategic inhouse selection, development, and production of filmed entertainment.