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With the new coronavirus shutting down film and TV productions across the world, many entertainment industry companies are bracing for a financial hit.
Naturally, it doesn’t seem like a great time for new product and service launches. U.K. producer and film financier Wayne Marc Godfrey (The Last Thing He Wanted, The Foreigner, A Private War), for example, via financial technology firm Purely Capital, which he founded and leads as CEO, earlier in March launched an entertainment receivables platform that allows rights owners, producers and distributors to bridge the funding gap created when content is licensed to streaming platforms and networks for long-dated payments. But he says that while the times are challenging, the new service has received solid interest, and his team has been focusing on highlighting how it can help industry players in the current environment.
How? Rights owners typically have to wait two to five years for licensing contracts to be fully paid out quarter-by-quarter, which can become a problem at a time when financials are hit by a crisis. But Purely Capital offers to buy contracted revenues from content licensing deals in return for immediate payouts, providing cash flow to rights owners, producers or distributors.
“Interestingly, we have had an influx of inquiries since we announced the launch,” Godfrey says. “We have had [a lot] of quotes generated. What I am trying to reposition is just articulating to potential customers that we are here to help you, we have the resources to support you through this period and if you have any long-dated assets that you want to accelerate, we are here to help you manage your cash flow. We are trying to quickly and efficiently support some of these distributors and producers who are coming to us now with a different kind of urgency and pressure.”
Distributors as Purely’s core focus are among the companies that need help now, he highlights. “With the theatrical business shutting shop, revenues are primarily being generated from streaming platforms and broadcasters,” Godfrey explains. “It’s amazing how the windows are breaking down due to the coronavirus after many years of Netflix and others challenging to reduce the windows. You have to be entrepreneurial in this climate and find ways through,” including possibly looking for licensing existing catalog titles.
Purely Capital’s business model differs from traditional bank loans or the like. Instead of loaning money against a revenue stream, it buys contracted revenues “at a slight discount” and then gets quarterly payments from the licensor “so that our customer doesn’t have to [wait],” Godfrey explains. “We have streamlined the way in which a receivable can be accelerated.”
That means deals can also move more quickly. “Doing a typical loan can take anywhere from five to seven weeks, sometimes longer, which is a very long time in our world right now if you think how quickly things are changing,” he says. “We are able to accelerate receivables in days.”
Purely Capital got a seed funding round in 2019 from Finch Capital, a financial technology venture capital firm, and says it has financed more than $35 million in deals in the early going, in deals for content licensed to the likes of Netflix, Amazon, Disney, Viacom, HBO and Starz.
Rather than fretting the coronavirus pandemic’s impact on Purely Capital and the sector at large, Godfrey says, “I feel even more empowered.” He adds: “It is really nice that we can help and support people through this unusual circumstance and uncertain times. In that sense, the [launch] timing maybe couldn’t have been better.”
And Godfrey says the the company is so far “on track” for hitting its March goals and is looking at the future with optimism. “The aim of the company is to over the next 12 to 18 months purchase $100 million-$150 million of receivables.” He adds: “We are at the start of the journey for Purely Capital, and we will try to adapt and evolve it so it suits the environment and customers in the best way we can.”
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