A lot of effort goes into the successful launch and management of a production company. This article addresses the operations and related development of production companies. It also addresses the structural organization of production companies, the different independent fundamental principles used by these companies as well as how these principles function in practice.

Production Company OperationsEstablishing the Production Company

During the early stages of the company’s establishment, it is important that producers enlist all their top resources in devising the best strategy and business structure. This means engaging the assistance of a professional attorney and business counsel—particularly those with industrial experience. This process should also include the creation of a mission statement, which highlights the vision of the company and its intended mode of practice.

Many production companies launch with only one principal. There is nothing wrong with this. However, choosing multiple principals offers several useful benefits. Going with multiple principals creates a more efficient system and better accountability. The strength of the production company increases with the different capabilities offered by multiple principals. A good example of this kind of partnership is the SpyGlass Entertainment Company, which is headed by Gary Barber and Roger Birnbaum. One partner offers a strong business background and the other contributes to the creativity of the company. Together they deliver a healthy balance of both.

If the company chooses multiple principals, each individual will need to come to an agreement on their respective earnings, operative control, contributions, and profit participation. Principals should also reach a collective agreement on the company’s mission. A written contract should reflect all these terms as well as the method for dispute resolution. For this reason, it is always advisable that the company’s attorney be present during the initial organizational meeting.

Searching for a Story

It is important to remember that only a tiny percentage of the scripts in circulation are worth producing. A production company’s primary mission is therefore to find the greatest scripts that are in-line with the kind of stories that it intends on producing. The search for the right scripts should begin immediately and in an organized fashion. Searches should involve both traditional and nonindustrial sources.

One of the ways that producers can improve the outcome of their search is by making a list of anyone that may be a potential source of good story resources. Many successful producers have found great stories through this medium. The oddest source may prove invaluable. Journals, unpublished books, and true-life stories have served as inspiration for great story plot lines.

Until they have been green-lit, stories that are presented to investors should clearly be described as such. Prospective investors should also be given the guarantee that the decision and development of pictures will maintain a conservative ratio of the producer’s share of earnings in relation to the production and distribution cost.