Finance for Broadcasting and Distribution

Terrestrial has already been rendered all but obsolete by satellite and cable. Now IP, with programmes on demand to PC, mobile and tablet as well as TV, is becoming dominant.

Taking advantage of the opportunities presented by streaming video on demand means new standards for everything from compression, with H265 looking set to dominate, to billing and revenue streams. The scope for marketing over IP, with targeted advertising and result-oriented payments is huge.

Technology has also slashed the costs of broadcast quality content creation as well as distribution, opening the door for a new generation of production companies.

Being able to take advantage of these new developments in a fiercely competitive sector demands an innovative and flexible management approach, expertise - and access to funding.

Understanding your funding options

You may need to find the right type of  funding option to allow you to:

• Set up a new content creation, broadcasting or distribution business
• Acquire premises
• Acquire equipment and assets
• Provide working capital
• Finance growth
• Deal with tax

Funding a new content creation, broadcasting or distribution business

Starting a TV broadcasting company used to be the preserve of major corporations. With advances in technology and the drop in prices of video cameras and computers, it is possible to start a TV broadcasting company for a relatively small amount of money.

There are now providers that will host your video content, and support your revenue generation. By outsourcing some of the resource-heavy aspects of the business you can set up a broadcasting - or narrowcasting - business. However, it is all too easy to underestimate the costs that are involved in setting up for yourself.

You’ll need to think about how you will structure your business. A limited company or a partnership may be the most appropriate foundation for the future. The costs involved for incorporation are minimal.

But however you structure your business, there will be some unavoidable costs too.  

Production costs 

If you intend to produce your own content, you should already have a clear understanding of the costs involved. A high-quality dramatic production could easily top £1 million per hour. Reality TV might cost tens of thousands, while Vox Pops or reportage could be produced at a fraction of that.

Marketing and Website

Securing your business’ name in domain form (.com, .co.uk. etc) will be vital. Registering a suitable name may cost only a few pounds, but if you need to buy a name that is already registered, you may need to negotiate with its registered owner. You may need to pay hundreds, or even thousands, of pounds to get a particularly valuable domain name. Using a variation, such as a .biz domain rather than the more familiar .com might be a more affordable alternative.

Setting up your website and promoting it through social media will be another essential investment. You might expect to spend £5000 to create even a simple website that is ready to present your services.

Building an audience for your content will also require investment. If you need to approach a broad base of end-users, marketing costs may be in the millions, although you could build a loyal audience for specialised material relatively cheaply.

Computer hardware and equipment 

If you are creating any kind of content, you will need a studio and editing suite. It may be possible to hire facilities, but time costs may make it more cost-effective to lease or buy your own.

The total costs of all these essentials will depend on your circumstances and your business model. You should remember that you will also have operating costs which will require funding until your business finds its audience and revenue stream.

Funding for startups can be difficult with many lenders. However, with a sound business plan and experience within the sector, you may be able to borrow the necessary funds with a startup loan, or a Secured or Unsecured loan.

Buying a broadcasting business

Buying an existing broadcasting business - whether as a partner buy-in or a complete buyout could offer an established revenue stream and a proven business model.

However, the costs may be very substantial, depending on the sector, the turnover, the potential it offers, the assets it already has and the skills and qualities of the staff who will stay within the business.

A Secured loan could help you to borrow the large sums required for a buy-in or buyout. You might also consider ‘jigsaw’ funding. This is a bespoke finance package, made up of a number of loan types, such as a Commercial Mortgage for the premises, with other loans to cover goodwill, and Asset Finance for the equipment.

Contact us to find out more about funding for buy-ins and buyouts.

Funding for premises

Your business will need premises. An office will be essential, and you may also need studio, editing and technical space.

Even a serviced office or studio suite will require an upfront payment. If you want to move straight into your own office complex,  you will also have additional costs, including power and business rates to budget for.

We can provide solutions for your premises leasing needs.

Renting may be unavoidable in the early days. However, renting premises restricts what you can do with your space, and means ongoing costs, and puts your business at risk of rent increases. Buying premises with a commercial mortgage could be a sound investment. If you already own your premises, a Commercial Mortgage might also be a cost-effective way to raise funds to use elsewhere in your business.

Find out more about a Commercial Mortgage.

Funding your equipment

You will need the full range of conventional office equipment whatever your business model. If you are producing content an entire video studio can be run using one high-powered computer with desktop video production, but you will also need a long list of additional equipment:

• Cameras
• Microphones
• Audio recorders
• Portable video uplink technology
• Media storage
• Live streaming system
• Lighting rigs

Asset Finance -  Hire Purchase and Leasing - can help make virtually any type of equipment you need affordable. Asset Finance works by making the equipment or ‘asset’, the security for the loan itself. This means that if you were unable to repay, the lender could simply repossess it. This reduces the risk to the lender and consequently the cost to you.

There are several types of Asset Funding:

Hire Purchase

Hire purchase lets you spread the cost of buying the equipment you will use for the long term. Arrangements generally last between 12 and 72 months. You pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours. At Rangewell, we can often help set up HP agreements that undercut those of equipment suppliers, or which let you take advantage of the lower costs of pre-owned equipment.

Leases

Finance and Operating Leases work like rental agreements and let you spread the cost of equipment with no upfront payment. This type of finance could be the best option for equipment which will have a limited life. You can simply return it to the finance house at the end of the lease, leaving you free to update to the latest technology. This may be particularly appropriate to the broadcast sector, where the pace of technological change is rapid.

Contract Hire

Contract Hire can be the most cost-effective way to provide company vehicles.

The lending your content creation, broadcasting or distribution business needs

At  Rangewell, we can work with you to find the most appropriate type of loan for any particular need.

There are two main types: Secured Loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home or your business premises. They can be used to borrow large sums of money, of £250,000 or more. These may be appropriate for many of the large costs you will encounter in the early stages of establishing your business.

Unsecured Loans can be suitable for smaller sums, from £5000 upwards, although some lenders will not let you borrow more than one month’s turnover with an unsecured loan.  

We can also help with a number of specialised loan products:

Working Capital Financing

Working Capital Finance can help you stay afloat and pay staff and suppliers during the early stages of your business. It is designed to provide the operating expenses, from staff costs to supplier bills while cashflow is slow. It is usually designed to be repaid in the short- to medium-term, once your broadcasting and distribution business is fully on its feet.

Growth Finance

Large-scale finance can be vital if you have major plans such as acquiring a competitor. Growth Finance can help. Lenders may require an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections, rather than on your trading history.

Revolving Credit Facilities

Overdrafts are a well-known form of business finance, but banks may be reluctant to provide them. Revolving Credit Facilities can be an alternative, providing a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds if you need them.

Invoice Finance

There are various revenue models that your broadcasting business might adopt. If your income stream is based around corporate sources, you may find that there are restrictions on your cashflow as a result of late payments. An Invoice Finance arrangement can bring you cash as soon as you issue an invoice, providing a flow of revenue that keeps pace with the amount of business you do.

Tax Loans - helping deal with demands

Whatever your revenue stream, you will face substantial quarterly VAT or annual tax demands. These can cause serious problems with your cash flow. Tax Loans help you to spread the cost of your tax demands into affordable monthly payments.

• Better control of cash flow
• Fixed monthly payments
• Quick and simple to arrange
• Avoids issues with HMRC, potential penalties and professional liabilities

Mezzanine Funding

Many lenders will simply not be able to lend you sufficient funds for major costs. Building a state of the art studio, or funding a major production may cost several million pounds.

Equity funding could provide the scale of funding you need. There’s nothing to repay, because you are basically selling a share in your business. It can mean losing control of your company – it will certainly mean sharing all future profits with your investors. Equity investors make their return from your growth.

Mezzanine Finance can provide a third way to raise the funds you need. A lender will provide the funds you need, secured on the future of your business. They will offer a high level of funding, but you will need to repay their debt and interest charges - if you fail to repay, they will have the right to take an agreed proportion of equity interest in the company.

How we help you capitalise your broadcast business

At Rangewell, we work with businesses throughout the broadcast, AV content creation and AV sectors. We understand your business and the potential it offers, as well as the challenge you face.

We can use the expertise we have built up to help you find the financial solutions you need to capitalise your business, whether you want to fund capital expenses, working capital or growth.

As well as  conventional finance products, we can help you find Alternative Funding, using new loan providers and styles of funding. We know the lenders who can offer the most competitive rates for your sector. Whether you have a straightforward finance need, or require a complicated ‘Jigsaw’ funding plan made up of a combination of products, we can work with you to find the answers that are right for your needs.

Call us now to get our experts working for you and the future of your business.