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Film Financing Under Uncertainty

Östlund, Hannes LU (2026) MIOM05 20262
Department of Industrial and Mechanical Sciences
Production Management
Abstract
Abstract
Independent European feature films are financed project by project from many sources at
once, each with its own conditions, payment schedule and claim on the film. This thesis asks
how Plattform Produktion, an independent Swedish production company, should structure the
financing of a film project so that the liquidity and budget it obtains are not bought at an
unacceptable cost in retained rights, decision autonomy and capacity to undertake future
productions.
The study combines project finance theory with principal-agent theory read from the agent’s
side, so that each financing source is treated as a principal whose monitoring, bonding and
incentive demands can be priced before the company commits. It is an abductive... (More)
Abstract
Independent European feature films are financed project by project from many sources at
once, each with its own conditions, payment schedule and claim on the film. This thesis asks
how Plattform Produktion, an independent Swedish production company, should structure the
financing of a film project so that the liquidity and budget it obtains are not bought at an
unacceptable cost in retained rights, decision autonomy and capacity to undertake future
productions.
The study combines project finance theory with principal-agent theory read from the agent’s
side, so that each financing source is treated as a principal whose monitoring, bonding and
incentive demands can be priced before the company commits. It is an abductive case study of
three of the company’s productions, built on their budgets, financing plans and cash-flow
plans and on seven interviews with the company’s founders and with financing and
production practitioners.
The material shows that a production can be fully financed on paper and still lack cash,
because its sources pay on different milestones. Every additional financier extends the budget
but adds contracts, reporting and territorial conditions whose cost is not visible in the
financing plan. Public and industry funding acts as a subordinated loss buffer that moves risk
away from the company while attaching governance conditions. The production side’s
compensation rises with the budget, which rewards cost, not profits. A structure of several
partly substitutable principals limits the power of each and can preserve the company’s
freedom of action.
The conclusions take the form of tests rather than a formula. Price every source on amount,
timing, conditions and control together, using the liquidity plan. Take on an additional
principal only where its contribution exceeds its coordination cost, and keep principal
negotiating power in mind when assembling the financing solution, preferring multiple
principals over a single financial contributor. Know where the company’s own exposure
begins once subordinated public money and deferments are counted. Bound what cannot be
controlled through caps, guarantees and exposure rather than by moving decisions to
financiers. Treat the company’s own compensation as part of the financing structure and as an
opportunity to benefit from profit rather than cost by retaining ownership and rights. The tests
are stated for Plattform but rest on features shared across independent European production
and should transfer with little adaptation. (Less)
Please use this url to cite or link to this publication:
author
Östlund, Hannes LU
supervisor
organization
course
MIOM05 20262
year
type
H2 - Master's Degree (Two Years)
subject
keywords
film financing, project finance, principal-agent theory, common agency, independent film production
other publication id
26/5363
language
English
id
9250132
date added to LUP
2026-09-07 11:03:14
date last changed
2026-09-07 11:03:14
@misc{9250132,
  abstract     = {{Abstract
Independent European feature films are financed project by project from many sources at
once, each with its own conditions, payment schedule and claim on the film. This thesis asks
how Plattform Produktion, an independent Swedish production company, should structure the
financing of a film project so that the liquidity and budget it obtains are not bought at an
unacceptable cost in retained rights, decision autonomy and capacity to undertake future
productions.
The study combines project finance theory with principal-agent theory read from the agent’s
side, so that each financing source is treated as a principal whose monitoring, bonding and
incentive demands can be priced before the company commits. It is an abductive case study of
three of the company’s productions, built on their budgets, financing plans and cash-flow
plans and on seven interviews with the company’s founders and with financing and
production practitioners.
The material shows that a production can be fully financed on paper and still lack cash,
because its sources pay on different milestones. Every additional financier extends the budget
but adds contracts, reporting and territorial conditions whose cost is not visible in the
financing plan. Public and industry funding acts as a subordinated loss buffer that moves risk
away from the company while attaching governance conditions. The production side’s
compensation rises with the budget, which rewards cost, not profits. A structure of several
partly substitutable principals limits the power of each and can preserve the company’s
freedom of action.
The conclusions take the form of tests rather than a formula. Price every source on amount,
timing, conditions and control together, using the liquidity plan. Take on an additional
principal only where its contribution exceeds its coordination cost, and keep principal
negotiating power in mind when assembling the financing solution, preferring multiple
principals over a single financial contributor. Know where the company’s own exposure
begins once subordinated public money and deferments are counted. Bound what cannot be
controlled through caps, guarantees and exposure rather than by moving decisions to
financiers. Treat the company’s own compensation as part of the financing structure and as an
opportunity to benefit from profit rather than cost by retaining ownership and rights. The tests
are stated for Plattform but rest on features shared across independent European production
and should transfer with little adaptation.}},
  author       = {{Östlund, Hannes}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Film Financing Under Uncertainty}},
  year         = {{2026}},
}