Tax-Motivated Film Financing at Rexford Studios

Posted: 10 Nov 2005

See all articles by Mihir A. Desai

Mihir A. Desai

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Mark F. Veblen

affiliation not provided to SSRN

Gabriel J. Loeb

affiliation not provided to SSRN

Date Written: November 14, 2002

Abstract

SUBJECT AREAS: Financial management, Financial strategy, Financing, International finance, Negotiations, Taxation, Valuation

CASE SETTINGS: United States; Entertainment industry; $400 million revenues, 100 employees; 2002

The head of production for Rexford Studios must analyze the terms and value consequences of an international financing involving a German film fund. The financing involves a sale-leaseback structure where international tax rules give rise to a sizable economic pie that is divided up among the fund investors, the studio, and the arrangers. To conduct the negotiation, the producer must value the cash flow streams to each of the parties and recognize the nature of the tax arbitrage in the context of his overall financing needs. As a consequence, the major issues involved in film financing and the nature of sale-leaseback transactions driven by tax considerations are explored, as is the competition between countries for film production. Finally, the underlying determinants of opportunities created by international tax rules are valued.

Note: Teaching Note Available.

Suggested Citation

Desai, Mihir A. and Veblen, Mark F. and Loeb, Gabriel J., Tax-Motivated Film Financing at Rexford Studios (November 14, 2002). HBS Publishing Case No.: 9-203-005; Teaching Note No.: 5-206-011. Available at SSRN: https://ssrn.com/abstract=845550

Mihir A. Desai (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6693 (Phone)
617-496-6592 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Mark F. Veblen

affiliation not provided to SSRN

No Address Available

Gabriel J. Loeb

affiliation not provided to SSRN

No Address Available

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