Slate models for media finance
Lazuli Solutions specifies, designs and builds financial models for media slate financing deals.
What’s the history?
Lazuli Solutions has been involved with media financing since around 2002.
In 2011, Lazuli Solutions participated in the first European feature film “slate financing” deal in Europe.
The deal was driven by Anton Capital, a boutique merchant bank in London and the client was Studio-Canal, part of Vivendi’s Canal Plus.
The total investment for 30% of the film releases was €150m.
Tinker Taylor Soldier Spy
One of the films in the first European feature film slate financing deal involving Lazuli Solutions.
What part did Lazuli Solutions play?
Lazuli Solutions specified, designed and built the financial model for this deal.
Financial close was achieved in autumn 2011 for a capital structure including bank debt and mezzanine and equity investments.
How does a ‘slate financing’ work?
This slate financing was a multi-picture financing agreement, as opposed to the European norm of single-feature bank financed deals of the past.
In modelling terms this means a very big model able to deal with hundreds of feature films. Techniques in Excel have now been developed to deal with large amounts of data.
It is a feature of these slate financing deals that the model must be run repeatedly to simulate multiple outcomes. A probability table is then constructed describing the simulated outcomes.
Lenders and investors typically require between 500 and 1,000 simulations to get comfortable with the results.
What did Lazuli Solutions learn from this deal?
The peculiarity of a ‘slate financing’ model is not the financial model and cash flow statements but rather the large amounts of films being described – this can exceed 100 and sometimes reach over 300.
There are various ways of dealing with repeated ‘chunks’ of data and logic such as this and each method has its pros and cons.
Parts of the process, particularly the repetitive ones, can be dealt with bespoke software engines coded in more sophisticated coding languages.