Currency Woes – Why the Weak Dollar Is Helping and Hurting Hollywood

Brent Lang at just posted a good article on how currency fluctuations are effecting film finance, film production, foreign sales and overseas box office.

I agree with his opening statement, that…

While the rest of the economy sputters, Hollywood is enjoying a windfall from the sickly U.S. dollar. The weakened currency is translating into a robust international box office and big profits for the entertainment industry.

A week dollar is great for US producers looking to secure foreign pre-sale contracts, but it can also work against US producers looking to shoot abroad.

I discuss currency in greater depth in my previous post, but in short, if you’re planning to shoot in a foreign country, you should either:

  1. Use local financiers or investors who can lend in the requisite currency;
  2. Lock-in your currency by purchasing forward contracts on margin (i.e. have your equity investor put up 10% of your foreign currency requirements.)
  3. Include a currency reserve in your budget (e.g. allocate enough money to absorb the impact of any negative currency fluctuations.)  At a minimum, the reserve should be between 2.5% and 5% of your budget.

When it comes to currency, everything is changing all of the time.  Flashy headlines about currency windfalls should neither be a catalyst for racing into production, nor a deterrent for shooting where you need to.  Trying to time the market is as futile as chasing better tax credits.

So let’s recap…

When’s the best time to shoot a movie? When you’re financing and talent packages come together.  Where’s the best place to shoot your movie? Wherever it makes the most sense (creatively and financially).

5 thoughts on “Currency Woes – Why the Weak Dollar Is Helping and Hurting Hollywood

  • August 2, 2011 at 9:48 pm

    Perfect timing for me and some projects on the board.

    Something new to throw into the mix.

    Thanks Jeff!

  • August 3, 2011 at 11:41 am

    Great info. I hear of productions wanting to go overseas, Czech, Hungary, etc., but never hear a word about the currency issue!

    Thanks, Jeff.

  • August 3, 2011 at 2:14 pm

    ‘Steele remembers one project on which he was $400,000 in profit thanks to the exchange rate after he lined up his funding, but was nearly $500,000 in the red three weeks into shooting after the dollar surged unexpectedly.’

    This is where hedging is a must when in FX profit. Very benefiticial to have a currency broker guiding on the best time to fix exchange rate at the right time.

    – Basic Limit and stop loss orders with forward contracts to fix exchange rates would have avoided any FX fluctuations.

  • August 3, 2011 at 8:33 pm

    There is nothing in this article concerning the Canadian Dollar and all of the shoots that happen north of the border. If there was a co-production treaty with Canada, imagine going south to shoot a film and getting more with the mighty Canadian dollar.

  • August 5, 2011 at 12:50 pm

    Excellent piece Jeff. Very timely for me.


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