FILM FINANCE TERMS N - R

Negative Pick-Up     A distribution agreement where the advance is payable only on delivery of the finished film to the distributor.

Negative Pledge     A covenant contained in loan documents where the borrower agrees not to creator permit to exist any other mortgage, charge or security interest over any of its assets. The covenant is often subject to stated exceptions.

Net Asset Value or Net Worth     The book value of the assets of a company or business less its liabilities, excluding liabilities to equity investors. The net asset value reflects the shareholders'/owners' net investment in the company or business.

Net Present Value or NPV     Today's value of money to be received or paid in the future after applying a discount to reflect the delay before it is received or paid. The accuracy of the result depends on the assumptions made in assessing the discount rate.

Non-Recourse Loan     A misnomer for a loan where the lender has no recourse to any party or any assets other than the assets over which the lender has specifically taken security, in effect the proceeds of exploitation of the film, and/or the single purpose vehicle which owns the assets.

Non-Standard Television     All forms of television other than standard television. It includes trapped audience rights, basic cable (except where the program signal is receivable over the aid with a standard rooftop or settop aerial, pay cable and over the air subscription television (STV), direct broadcast by satellite (DBS), master antenna television (MATV), multi-point video distribution systems (MVDS) and satellite master antenna television systems (SMATV).

Non-Theatrical Rights     The rights to exhibit a film to a live audience by direct projection by means of sub standard gauges (for example 16mm or 8mm) or by video grams, where the exhibition of films on a regular basis is not the primary purpose and when no specific admission charge is made for the exhibition. The exercise of non-theatrical rights is usually limited to educational establishments, nursing homes, hospitals, `shut in locations' - such as prisons, convents and orphanages- and clubs and other organizations of a religious, educational, cultural, charitable or social nature.

Novation     The transfer of all benefits and obligations under a contract. The transfer requires the consent of the person to whom the obligations are owed. This is to be contrasted with an assignment, which is the transfer of the benefit only of a contract or other right, and may not require the consent of the person owing the obligation.

NTSC     National Television System the code system used in the USA and Japan by which color television pictures are distributed or transmitted using 525 lines. See also PAL and SECAM.

Off-Balance Sheet Finance     An arrangement under which a loan is made to a company without the debt appearing on the investor's balance sheet and affecting its gearing ratio. Historically, the use of off-balance sheet financing techniques was widespread. Latterly, however, it has become difficult to keep assets and liabilities off a company's balance sheet in view of FRS 5,`Reporting the Substance of Transactions'.

Optical Sound Negative     To make optical sound combined prints the final master magnetic mix is re-recorded as a photographic optical sound negative. This negative is synchronized and printed with the final cut picture negative on positive stock, to make the married print.

Option     In the context of film, an option is a right exercisable during a specific period for a specific sum to acquire certain rights for example the right to produce a film based on a book, or a right to require an artist to contribute to a production.

Overages     Distribution revenues payable to the producer after the advance or minimum guarantee has been recouped.

P & A Commitments Spend     A contractual obligation imposed on a distributor to spend specified minimum sums on prints and advertising to support the initial theatrical release of a film.

Packaging     The provision, usually by a talent agency, of a package of individuals to work on a film. The package might consider of anyone or more of the director, screenplay writer, stars and members of the supporting cast. The package is presented as a whole - you cannot choose some elements only. 
Pact 
Producers Alliance for Cinema and Television, the UK trade association for film and television producers.

PAL     Phase Alternative Line the code system used in the UK by which color television pictures are distributed or transmitted using 625 lines. PAL is also used in an increasing number of countries in Europe. See also NTSC and SECAM.

Panning and scanning     The process by which a film shot on an aspect ration (the ratio of the width to the height of the picture) suitable for cinema distribution (eg 1.85:1 or 2.3:1) is reduced and adjusted for television transmission (standard screen 1.33:1, wide screen 1.8:1). When a film is shot for both theatric distribution and television transmission the viewfinder is often `masked to ensure that the main action is within the television aspect ratio.

Pay or play     A commitment to pay a director or performer made before production commences, and some times before all the finance has become unconditional, regardless of whether his or her services are used.

Pay television     Television programming (other than basic cable) for which the viewer has to pay something other than a government license fee.

PFD Agreement     An agreement which deals with the production, finance and distribution of a film as opposed to one or two only of these elements.

Pledge holder agreement     An agreement under which a processing laboratory agrees with the financiers of a film not to part with possession of the original negative and the principal film materials without prior written consent of the financiers. See also access letter and laboratory letter.

Points     Shares of back end or net profits in a film are measured in percentage points. To have points in a film means to have a share of the net profits.

Pre-sale     A license or distribution agreement entered into before a film has been completed. The advance, minimum guarantee or license fee payable under the pre-sale may form part of the finance package for the film, either as a direct contribution towards the cost of production or, if the advance, minimum guarantee or license fee is only payable on or after delivery of the film, it may be discounted.

Prequel     The opposite of a sequel - it is set before the events depicted in the film from which it is derived.

Priority Agreement     An agreement between the financiers and, sometimes, the completion guarantor, regulating the priority of their respective security interests in the film

Private investor     An individual, often having little direct connection with the film industry, who invests his own money in a film. In the world of theatre he is referred to as an angel.

Producer's share of net profits     Net profits are what is left of revenues from the exploitation of the film after distribution fees and expenses, repayment of any loans and investments raised to finance production, repayment of any sums extended by the completion guarantor and the payment of any deferments. Net profits are normally divided between the investors and the producer. The producer's share is usually between 40-60% of the net profits, out of which the producer may have to pay the profit entitlements (points) of various individuals and others who have contributed towards the film. These shares are fixed either as a share of the producer's share of net profits or as a share of 100% of the net profits. See also back end.

Production to budget undertaking     The undertaking given by the individual producer to the completion guarantee that the sums allowed in the budget for the film approved by the financiers and completion guarantor for the cast, living expenses, music and legal fees will not be exceeded.

PRS     The Performing Right Society Limited, the British collecting society which licenses performing and broadcasting rights in musical works on behalf of composers and music publishers and collects and distributes revenues derived from such licensing.

Recoupment order     The order in which investors and financiers are repaid their loans and investments (and interest). Although all revenue may be applied in a single order, often revenue from different distribution territories or media are applied in different orders.

Remake     A new production based substantially on the script of an existing film. A remake may be a new production based on the script of an old film, such as the various versions of A Star is Born, or an English language remake of a foreign language film, for example, the French film Nikita remade in America as The Assassin.

Residual     A sum of money, payable under a union, guild or individual agreement, to a performer, musician, writer, composer, director or producer by reference to the means by which, or the place in which, the film is exploited.

Revolver or revolving facility     A loan facility which requires loans to be repaid at the end of given periods - usually each interest period - but enables the loans to be immediately redrawn at the end of those periods subject to a final repayment and termination date. Such facilities often arise when the borrower has the option of borrowing in more that one currency.

Roll over relief     A relief for capital gains tax purposes (or corporation tax, in the case of a company). It operates by deferring liability for tax on a sale, where the proceeds are invested in further qualifying assets, until such time as a sale takes place and there is no such reinvestment.

© 2007 Raindance Film Festival Ltd.
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