Seven Arts Pictures (SAPXF.OB), an independent producer and distributor of feature-length, high-quality, low-cost films, recently announced revenues of more than $10 million in 2007 and profits of $2.2 million. The company anticipates revenues to exceed $15 million in 2008 and expects profits for drama, adventure and horror-comedy entertainment to post a significant increase in the months ahead.
The company’s core business strategy is to finance, produce and distribute four to seven films per year with budgets of less than $10 million each and with built-in margins based on pre-sales of 30 to 50 percent. When combined with careful construction of the film’s director, actors, producer and writer, the company creates a valuable long-term asset as a library title. Seven Arts Pictures business model is not based on blockbuster receipts from first-run theatrical release, but instead on pre-sales of DVD and pay-per-view, along with pay and free television rights worldwide.
Seven Arts Pictures plans to expand its current movie library of 35 films to more than 125 titles within the next five years by producing four to seven films per year and by carefully acquiring additional titles. The company will seek to acquire completed films for distribution as an agent for a fee of 15 percent to 20 percent. Seven Arts believes there is significant value in the “straight to DVD” market and will continue to exploit this area going forward.
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