As far as investment options are concerned, purchasing the shares of a film production company remains a slippery slope for some. On one hand is the allure of Hollywood, and on the other is the apprehension about audience numbers decreasing. To a large extent, the decision to invest depends on the maturity level of the studio or production company. From production to distribution, there are growth and mature public companies in each industry.
Over the past few months, one film company in particular has been generating national headlines for all the right reasons. Medient Studios, Inc. (OTCQB: MDNT) (“Medient”) has been undergoing one of its best phases over the last year or so. Headed by producer Manu Kumaran, Medient is an interesting growth stock for investors not interested in tying up their money in industry heavy weights like Time Warner Inc. (NASDAQ: TWX), Regal Entertainment Group (NASDAQ: RGC) or cinema chains such as Carmike Cinemas (NASDAQ: CKEC).
Medient has withstood the test of time, with over fourteen productions over the past twelve years. The company’s most recent films, Storage 24 and Yellow, were filmed in the UK and the US respectively.. Neither of the films had a huge production budget or a star in the lead role, yet both of them ended up generating strong reviews with both domestic and international audiences.. In addition to the theatrical releases, there have been some other developments over the recent past that could prove positive for Medient stock.
Plans for New Studio:
Medient is building a movie studio in Effingham County, Georgia. The plans are to make it the largest physical movie studio in the US and it is expected to cost $90 million. Already, Medient has brought Prime Focus Ltd. on board to help with the funding of the studio. According to Mr. Kumaran, Prime Focus will contribute approximately $40 million to the project. As of now, it is quite certain that the project is on track and a 1,500-acre site has been selected for the studio.
Tax Incentives for Movie Production:
The past few years have seen US movie production houses shift production to other countries where they receive attractive tax rebates. In a bid to counter this move, several states have stepped up the tax incentives for movie production. The main reason remains the job creation and revenue generation a film’s production brings to a state. Not only is Medient going to benefit from this in the future, but other movie studios as well. Producing movies in the US will not cost as much as it does at present, which will increase the profits for production companies. The 30% tax credits guaranteed by the state of Georgia is one of the significant reasons why Medient is setting up a studio there.
New Sales Agent on Board:
Atlas International Film GmbH has become the official international sales agent for the movies produced by Medient. The German-based company brings with it over four decades of experience in this field and represents over 100 producers around the world. Atlas is also going to provide a sales advance of up to $30 million to help fund the initial slate of movies. The deal further states that Medient is going to increase the number of movies it produces annually to around 8 to 12.
The Target Market
Medient not only targets American audiences with its films, but an audience from around the globe. Storage 24 was a British production while their film Mr. Singh and Mrs. Mehta was made in Hindi to target the Bollywood market. The Bollywood market has been growing in leaps and bounds, with revenues exceeding $3 billion last year. While this does not match the pedigree of Hollywood, where movie revenues can easily go beyond $50 billion, it points towards a market headed in the right direction. Having Manu Kumaran as CEO helps, as being from an Indian background, he understands the sensibilities of the audiences there, and has produced movies in four languages and over four continents.
As evidenced by the recent developments regarding Medient all the signs point towards a strong future. If the company manages to complete the largest studio in the US on time and increases the number of movies it releases annually, it could become the leader in US film production. The bottom-line is that Medient. is one of the few movie stocks you should consider investing in.
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