New Survey Report By Rothstein Kass Finds Securing Talent Is Increasingly Critical to Entertainment Project Finance, Production Company Success

Hedge Funds, Private Equity Funds and Wealthy Individuals Seen as More Important Sources of Financing

Content Piracy Seen as Growing Concern

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May 24, 2010, 08:30 ET

NEW YORK and BEVERLY HILLS, Calif., May 24 /PRNewswire/ -- International accounting and advisory services firm Rothstein Kass (www.rkco.com) today released "Behind the Scenes," a research report examining critical factors – from talent to distribution – impacting entertainment project finance and production company profitability. The report features the results of a survey of 141 production company executives, conducted in the first quarter of 2010. Findings reveal that more than 63 percent of respondents believe that attracting name talent to a project remains a critical factor in obtaining financing now, and over three-quarters suggest that this will be very important factor in three years. Nearly 54 percent of survey participants indicated that securing talent will also be very important to penetrating foreign markets in three years. The cost of hiring on-screen talent rated as a significant factor impacting the business now and in the future, with nearly 54 percent of survey participants expressing concern today and a greater number – over 63 percent – expecting this to be an important consideration in three years.

"Hedge funds, private equity funds and high-net-worth families have long been important sources of capital and our survey findings indicate that these investors will play an even greater role in entertainment finance three years from now. While the allure of involvement in a Hollywood production was once sufficient motivation for many investors, recent market volatility has compelled most investors today to develop a more sophisticated approach. The alternative investment community is using its increased influence to demand access to projects backed by star-power, recognizing that these are the productions that have the greatest chance of success," said Rick Flynn, a Principal in the Family Office Group at Rothstein Kass. "Astute investors, however, recognize that entertainment is an inherently risky allocation that must be measured alongside overarching risk profiles and liquidity requirements. For high-net-worth families, it is particularly important to weigh production finance against long-term financial and lifestyle objectives as a component of a balanced portfolio."

Research for "Behind the Scenes" was conducted by Russ Alan Prince, a leading authority and counselor on private wealth, and Hannah Shaw Grove, a widely recognized expert on the behaviors and finances of wealthy individuals. Approximately 60 percent of survey respondents were producers. An additional 30 percent of participants held financial positions within their organizations. Nearly 60 percent of respondents produced feature films and over 30 percent worked in television. Almost 40 percent reported involvement in Internet projects with an additional 20 percent working on projects including commercials and music videos. Insight into the findings was provided by the Principals and professionals of the Rothstein Kass Family Office Group.

"The widespread adoption of digital distribution systems has facilitated 'on demand' delivery of content. Point-of-purchase online sales have been a boon for major productions companies. Many are actively working to amass large catalogs of popular properties to meet growing consumer demand and generate revenues that can be used to fund future projects," said Mark Hutchison, a Principal in the Rothstein Kass Family Office Group. "The downside, of course, is that digital distribution models have enabled content piracy by hackers and intellectual property thieves. Though only around 15 percent of survey respondents believe that piracy resulting in the meaningful loss of revenues is a key factor impacting the business today, nearly 60 percent anticipate that this will be a critical concern by 2013. Studios and production companies will be very aggressive in defending their libraries, relying on a blend of technological enhancements, education and enforcement to deter theft."

"Behind the Scenes" is available online for download at the recently enhanced Rothstein Kass website (www.rkco.com). Among notable findings of the report:

Nearly 30 percent of survey participants believe hedge funds are an important source of capital today, and 45 percent believe that hedge funds will be important sources in three years.
Over 35 percent of respondents suggested that private equity funds play a critical role today, with nearly 57 percent reporting that these vehicles will be important sources of capital in 2013.
Roughly 20 percent of those polled indicated that wealthy individuals are important sources of finance today, with nearly 40 percent expecting the high-net-worth community to play a significant role in three years.
Ownership of intellectual property is seen as a key factor impacting the business by nearly 60 percent of survey respondents. Over 75 percent expect this to be a concern in 2013.
57 percent of respondents believe that piracy resulting in meaningful loss of revenues will be a significant factor impacting the business in three years. Only 16 percent believe this is true today.
56 percent of survey participants suggested that name talent is very important to domestic revenues today and nearly 63 percent believe this will be true in three years.

About Rothstein Kass:

Rothstein Kass is a premier public accounting and advisory services firm that has served privately held and publicly traded companies, individuals, and families for more than 50 years. Rothstein Kass has offices in California, Colorado, New Jersey, New York, Texas and the Cayman Islands, each of which has received recognition as a "Best Place to Work."

The Rothstein Kass Family Office Group offers a wide range of financial, wealth planning and lifestyle management services to family offices and high-net-worth individuals. Composed of seasoned financial professionals and certified public accountants, the Family Office Group applies proven expertise with the utmost discretion and attention. Clients include business owners and members of the financial services, entertainment and sports communities.

About the Authors:

Russ Alan Prince is the world's leading authority on private wealth, the author of 40 books on the topic, and a highly-sought counselor to families with significant global resources, and their advisors. He is co-author of Fortune's Fortress: A Primer on Wealth Preservation for Hedge Fund Professionals.

www.RussAlanPrince.com

Hannah Shaw Grove is a widely recognized author, columnist, speaker and an expert on the mindset, behaviors, concerns, preferences and finances of high-net-worth individuals. She is co-author of Inside the Family Office: Managing the Fortunes of the Exceptionally Wealthy.

www.HSGrove.com

SOURCE Rothstein Kass