FilmTVRisk

Becoming a millionaire in Hollywood

At the IIFF event I again heard one of my favorite truisms about the industry. How do you become a millionaire in the film business? Answer: start with a billion dollars and buy a film studio...

Film financing

Interesting evening Wednesday at the IIFF film finance town hall meeting at LA Film School. Great speakers and very informative. The market for financing is tight for many reasons - the vanishing of easy money, absence of pay tv deals (unless you have a studio output deal), and the decline in values for foreign presales. Likewise hedge fund money is GONE for the industry after all the naive capital got burned. To get financed these days takes a good plan,lots of due diligence, and a clear understanding and management of risk. At CMM, we can help advise you on the risk and due diligence part. To learn more, contact me at cpalmer@cmmeiers.com

White tiger cub

Bubbles

Working with Bubbles the elephant in South Carolina.

Production Insurance and Hurricanes

In recent years, many producers have been told they cannot be covered for losses due to hurricanes under their Production Insurance.  And with almost all entertainment insurance brokers, that is true.  Underwriters are often wary of the large potential losses if a hurricane hits the area where a film or television show is shooting.

But over the last fifteen years, I have been able to secure hurricane and wind coverage for my clients, on very favorable terms.

I have the most experience with identifying and controlling the risks to production involved with hurricanes and other natural disasters of any broker/risk control consultant in the industry.  I have provided hurricane advice to feature, reality and episodic productions in such diverse locations as Mexico, Saint Maarten, Puerto Rico, Florida, Louisiana, Hawaii, Texas, North Carolina, Australia, Tahiti, and the Solomon Islands.  My contingency plans help you define:

• Timelines and checklists for each stage of an approaching hurricane/cyclone - including phases for shutdown, evacuation, sheltering and resumption
• Identification of evacuation and storage sites
• Notification and communication for staff and interested parties
• Equipment and supplies for evacuation/sheltering
• Steps to mitigate damage and downtime

• How to document for the insurance claim

I offer onsite consultation to advise on location vulnerability, help identify safe evacuation sites and establish and implement the contingency plan.  On many occassions I have even been onsite to advise clients through the shutdown, evacuation and resumption of production.

If you are considering shooting anywhere in hurricane or cyclone country, shouldn't you be with a broker that has 'been there' and can guide you through the process?  To learn more, contact me at +1 818 224 6142 or by email

Profile

A risk and insurance professional for more than twenty years, Chris is a recognized authority on international film and television risk.  He was director of risk control for Aon/Albert G. Ruben for twelve years.

He has provided risk control consultation on more than 900 film and television productions including Sahara, Titanic, X Men, Flyboys, Tomorrow Never Dies, The World is Not Enough, Behind Enemy Lines and Windtalkers.  He managed production safety and was a risk management consultant to MGM/United Artists for five years.  He was safety/risk management consultant for all HBO productions from eleven years and advised studio and independent productions for Fox, Disney, Miramax and Hallmark Entertainment.

 

A pioneer in reality television safety, he was the on-set safety and risk management consultant for the first three seasons of Fear Factor.  Other reality television projects include American Idol, American Inventor, America’s Got Talent, Big Brother, MTV Video Music Awards.

As a member of the Alliance of Motion Picture and Television Producers Industry Labor-Management Safety Committee, he helped draft many of the industry safety bulletins.

Chris is the author of the CMM World Risk Guide, which measures the risks facing filmmakers in every country in the world.  A constituent member of the U.S. State Department Overseas Security Advisory Council, he provides clients with international production exposures with up to date security and threat assessment information, advises on risk protection measures including security measures for crime, kidnap and ransom, extortion, terrorism, evacuation and crisis management.

Chris has taught film and television production safety at the Directors Guild of America, American Film Institute, and UCLA Film School.  He has been a featured speaker at many industry events including International Film Finance Summit, RIMS Entertainment section, Mexican American Chamber of Commerce, and the Morrison/Foerster ‘Managing Risk in Reality Television’ seminar.

By identifying and controlling risk and helping the underwriters understand the nature of your production, Chris helps obtain more favorable terms from the insurance underwriters.  Many difficult-to-insure productions have been cleared through this process.  He also assists clients with hurricane contingency planning, security and medical evacuation plans, accident investigation, claims advocacy, injury and illness prevention plans and government agency liaison.

He has been featured in dozens of articles for publications including Variety, Hollywood Reporter, New York Times, Daily Telegraph (UK), Chicago Tribune, and the Los Angeles Business Journal.  He has also been a guest on National Public Radio programs  “The Business” and “GeoQuiz”.

Clyde watches the world

Clyde has always been an indoor cat. But at age 15,he took his first walk on a leash in the big outside world.

Managing the Risks in Overseas Film Production

Managing the Risks in Film Production

http://findarticles.com/p/articles/mi_qa5332/is_12_51/ai_n29148225/

Why the Housing Bailouts and the Stimulus Will Fail

After nearly a half-century of life, I probably should not be so amazed at how quickly people rush to what they think is an easy or painless solution.  Note the Obama phenomenon, how not only voters but the media and those who should offer critical opinion simply embraced Barack unquestioningly.  First, let me make it clear that I have always hoped we would have a female or minority elected President.  As an American, I am especially proud of the diversity of our country.  It was easy for many to be caught up in the idea of a young and energetic President with new ideas. 

But there is a danger in allowing sweeping changes that will have long term consequences to be pushed through without sufficient discussion or forethought.    There should be real debate before committing trillions of dollars we do not have to a stimulus that will not solve the problem.  Politicians want to be seen as 'doing something' and always love to tell people that they are going to give them something they want.

But let's be clear.  Our current economic crisis was brought about by too much credit.  The interference of the government - artificially supressing interest rates, guaranteeing loans and ignoring nearly a century of prudent lending standards - led to too much credit given on terms that were not sustainable.  Very few 'zero down', 110%, Pay Option or loans that were 5, 10 or even more times the borrower's income would have ben made if these loans were not being purchased by Fannie and Freddie (private institutions chartered by the federal government).  Likewise, the market for Mortgage Backed Securities and derivatives could not have grown were investors not desperate for a reasonable return on investment - since insured bank deposits paid rates far below the rate of inflation, investors looked elsewhere.

All this easy credit led to massive levels of consumption and what appeared to be ever-increasing real estate prices.  As previously discussed, those prices were not sustainable.  The policies being pursued by the Obama administration and their allies in Congress are geared toward stopping the decline in home prices and somehow trying to return to the 'glory days' of real estate.  Witness the foreclosure moratoriums, forced loan modifications, giving taxpayer money to anyone who will buy a home.  These geniuses think that if somehow everyone will just buy these houses, all will be well.

I have news for everyone - the 'glory days' are GONE and they are not coming back.

In the name of 'affordable housing', they pushed lenders to make more loans to those with marginal credit and incomes.  They eliminated the credit risk to those creating the loans by purchasing huge numbers of mortgages, no matter how poorly underwritten.  They ignored the warnings about Fannie and Freddie's business practices.  They ignored the warnings of the housing bubble and the systemic risk posed by MBS and derivatives.

They want you to believe that the problem was caused by greedy lenders and a lack of regulation even though our economy's blood is all over their hands.

Those who raise the issue are accused of being obstructionists or 'preferring to see the country fail rather than allowing the president to succeed'.  The sound bites castigating lenders sound good (and don't get me wrong, their are lenders who acted like dirtbags and deserve punishment) and they are reassuring all those poor 'victims' that the government will help you out.  The next time you hear one of these opportunists spouting off on the subject, remember they are taking YOUR money and giving it to someone who does not deserve it.  Someone with an income of $60,000 who borrowed $500,000 they could never hope to repay.  Someone who refinanced their house for double the original mortgage and blew the proceeds on fancy vacations, $5,000 televisions and a Lexus.  Someone who showed no common sense and now refuses to show an ounce of personal responsibility.

Allowing people to avoid the consequences of their mistakes only enables them to make the same mistake again.  But in this case, the rest of us who act responsibly and pay our bills on time are being forced to pay.  Worse yet, the unprecedented debt being racked up by our new ruling party will bring the nation to its knees.

The housing crisis will only end when the bad debt is worked through, the homes sold to willing buyers at a low enough price to justify the purchase and when lenders are willing to lend without incentive or pressure.  The best way for this to happen is to let the market function - prices should be allowed to fall without interference.  When the prices are low enough, people and companies will buy.  The homes will be lived in, either by the purchasers or by tenants.  Rents will go down.  Savings will go up.  Those who already own homes will be sad to see their supposed 'wealth' of equity is gone, but hey, if they were responsible in their borrowing they can afford their mortgage payment anyway.

Back to our irresponsible leaders.

Many people assume that the government sets the interest rate at which the federal government borrows when selling Treasury bonds.  For those who don't know, these bonds are sold at auction and the prices bid by the purchasers (global financial institutions, sovereign wealth funds and investors) determine the interest rate.  Because of the AAA rating of US government debt and the belief that the US could never default, the interest rates are among the lowest anywhere.  Many assume that there will always be a buyer for this debt no matter how large.  But the day is coming where the low interest rates paid on US government debt will end.  Already there are rumblings in the international community about the size of the US deficit and real questions are being asked about the ability to repay.  Even the AAA status may be at risk.  The ongoing devaluation of our dollar is another concern for the holders of our debt.  Being repaid in a declining currency hurts and the best way to make up for it is to charge more interest to offset the loss in purchasing power.

So even if it does not bother you to saddle future generations with crippling debt, you should be concerned that our government may be cut off from its supply of cheap credit.

It should concern you even more that if this happens, the Treasury and the Federal Reserve's ability to set interest rate policy evaporates.  Any possibility of sovereign default by the US would send tremors the global financial system.  An actual default would have catastrophic consequences unseen in modern financial history.

Some might think I have a political ax to grind.  I don't.  Politically, I am an independent, largely libertarian.  I believe in a strong national defense, an (adequately but not excessively) regulated free market, and equal rights for everyone under the law.  I am color blind on the issue of race agreeing with Dr. Martin Luther King that what matters is the content of your character, not the color of your skin.

Hurricanes and production

Hurricane season is in full swing.   Although June and early July are usually quiet in terms of major storms.  If your production activities will take you into 'hurricane country' during the season, now is the time to make sure you are prepared.

As Director of Risk Services at CMM Entertainment, my job is to help our clients identify, control and manage risk.  One of my specialties is dealing with the potential effects of hurricanes. Oover the last 19 years, I have helped many clients deal with this risk and have overseen evacuations of film and tv productions in the paths of hurricanes in places like Cancun, New Orleans, and Sea Island,Georgia.

The first thing to consider is how likely is it that a hurricane could affect your shoot? The coastal United States from Texas to Maine is theoretically at risk from hurricanes during the season - June through October.  Hurricanes can and have occurred outside these months but are pretty rare prior to June or after October.  It is also unusual to have major hurricanes impact coastal areas north of Virginia, though some historic storms have impacted Long Island and points north.

In terms of likelihood and severity, the main areas of concern are the Gulf Coast from Texas through Florida and the Atlantic coast from Florida to North Carolina.  The more active months are August and September, especially for the Gulf and southern Atlantic coast areas.

Vulnerability of the area:  It is important to remember that most deaths in hurricanes are from storm surge, not from wind.  So if your location is a barrier island that is only a few feet above sea level, the risk is much greater than it would be on the mainland with greater elevation.  Are you directly on the oceanfront or in a more protected back bay area?  Can your hotel withstand high winds and storm surge?

Access:  How easy or difficult will it be toevacuate in the event of a hurricane watch or warning?  This is an important consideration in your planning as it will help determine your time-line for beginning the evacuation process.  A major film client of mine was filming on Jekyll Island, Georgia a number of years ago.  There is one bridge between the island and the mainland.  As part of the hurricane contingency plan I prepared, I talked with the local emergency management people about evacuation protocols.  They told us that our trucks would have to be off the island 36-48 hours before projected landfall as the bridge would only be used to evacuate people in the last 48 hours and our equipment trucks would have to be left behind if they were not off the island by that time.

Having a Plan: The key components in your plan are - protecting your people, protecting your equipment, evacuation and return and resumption of filming.  My article Hurricane Contingency Planning for Film and TV Production (available to clients) outlines in detail how to prepare a plan and manage resumption of operations but here are a few highlights:

• Prepare and maintain a list of all personnel including name, phone numbers, hotel information, emergency contacts and vehicle details.
• Set evacuation parameters.  My rule of thumb is you CAN ride out Category 1 and 2 storms if the location can withstand the surge and accommodations are strong enough to withstand those wind forces.  Category 3 and above you run from.  Determine how far ahead of landfall you need to begin evacuation - this will be affected by the quality/capacity of roads and the population in the area.  When setting the time-line for beginning evacuation remember that you do NOT want to get caught by the storm along the evacuation route.  Talk to locals about the time it will take to reach your evacuation site and remember that it might take 8 to 12 hours to go 100 miles...
• Identify inland evacuation sites.  How far inland you have to go depends on the size/strength of the storm and other factors such as elevation.  For example, if low-lying land/swamps continue inland for a significant distance, you may have to travel further to escape storm surge and flooding.  This is especially true in areas of Louisiana, Georgia and Florida.
• Establish a point person outside the hurricane area to handle inquiries from family members and provide updates on the evacuation status. 
• Identify where your vehicles will go.  For larger productions with lots of vehicles, you may need a large lot.  Locate and secure lots at your inland evacuation site.

• Make contingent reservations for accommodations inland.  By the time an evacuation is ordered or even appears likely, rooms far inland are usually booked solid.  Pick your inland hotel, let them know how many rooms you will need and you can often get them to give you first shot at holding the rooms in an emergency by giving them a small deposit.

• Resumption. When you return will be affected by many factors - clearing roads, restoration of utilities, etc. 

The Right Adviser: Having the right advice makes all the difference.  CMM understands the business of production and will be your insurance advocate and help manage your risks.  To learn more, contact me at +1 818 224 6142.