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SONY-POWER STATION Joint Venture Proposal & Deal May 1987
SONY-POWER STATION Joint Venture Proposal & Deal May 1987
Advisory, Inc .
717-569-4100
STANLEY J. CATERBONE
PRESIDENT
DIGITAL MOVIE
PROJECT
THE DIGITAL MOVIE
A Joint Venture Proposal for The Sony Organization
Developed by.
Stan J. Caterbone
Representing: Tony Bongiovi
Power Station Studios
Flatbush Films
Gamillion Studios
Advanced Media Group, Ltd.,
Page 1 of 30
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LAW O F F I C E S
PLAZA
P H I L A D E L P H I A , PA. 1 9 1 0 2
A R T H U R H. S E I D E L
TELEPHONE:(215) 5 6 8 ~ 8 3 8 3
3 O E L S. GOLDHAMMER
M I C H A E L P . ABBOTT
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2 5 J u n e 1987
p~
GROUP
D A N I E L A . MONACO
ROBERT H. HAMMER lil
I. I , b I 8 4
E D W A R D C. G O N D A
I 1 9 3 0 I S e 5 i
DURLiNG
S T E P H E N J. M E I E R S
AMANDA L A U R A N Y E *
NANCY A
845~218
CABLE. SIPAT
TELkCOP$ER 1 2 1 5 1 5 6 8 ~ 5 5 4 9
G R E G O R Y J. LAVORGNA
THOMAS J
TELEX
OF C O U N S E L
SYLVIA A . G o s r T o r r v l
S T A N L E Y H. Z E I H E R
RUeNER
SCOTT J FIELDS
N r . S t a n l e y Caterbone
FMG A d v i s o r y , I n c .
Eden P a r k I 1
1 7 5 5 Oregon Avenue
L a n c a s t e r , PA 1 7 6 0 1
RE:
Power S t a t i o n
Our F i l e :
7351-G
Dear S t a n :
I h a v e now r e c e i v e d t h e r e s u l t s o f a s e a r c h
p e r t a i n i n g t o t h e above s u b j a c t .
I have a l s o r e v i e w e d t h e f i l e
f o r w a r d e d w i t h y o u r l e t t e r o f May 2 9 .
The f o l l o w i n g i s my
a n a l y s i s and e v a l u a t i o n of t h e r i g h t t o u s e "Power S t a t i o n " a s
d e f i n e d below.
A s I understand the s i t u a t i o n , your b u s i n e s s c l i e n t ,
Power S t a t i o n S t u d i o , h a s , s i n c e 1 9 7 7 , o p e r a t e d a r e c o r d i n g
s t u d i o with a widely regarded r e p u t a t i o n f o r providing high
q u a l i t y r e c o r d i n g s e r v i c e s u s i n g s t a t e of t h e a r t e q u i p m e n t .
The
e n c l o s e d r e p o r t r e v e a l s t h a t Power S t a t i o n s t u d i o h a s r e g i s t e r e d
t h e t r a d e m a r k "Power S t a t i o n " f o r s o u n d r e c o r d i n g s t u d i o s .
(See
Reg. No. 1 , 4 3 3 , 3 2 8 r e g i s t e r e d March 1 7 , 1 9 8 7 . )
You h a v e a s k e d me
t o i n v e s t i g a t e t h e p o s s i b i l i t y o f Power S t a t i o n e x p a n d i n g t h e u s e
o f i t s mark i n t o m e n ' s and women's c l o t h i n g i n c l u d i n g b e a c h w e a r ;
a n d f o r a u d i o a n d vide(:, e l e c t r o n i c s f o r c o n s u m e r s a n d
professionals.
I h a v e assumed t h a t t h i s l a t t e r c a t e g o r y i n c l u d e s
radios, television receivers, video c a s s e t t e r e c o r d e r s , a u d i o
r e c o r d e r s , compact d i s c players, turn t a b l e s , amplifiers,
r e c e i v e r s , t u n e r s , c o n t r o l p a n e l s , mixing b o a r d s and c o n s o l e s ,
among o t h e r t h i n g s .
Based upon t h e r e s u l t s of t h e e n c l o s e d s e a r c h , i t i s
my o p i n i o n t h a t i t would be i n a d v i s a b l e f o r Power S t a t i o n , I n c .
t o u s e i t s mark f o r c l o t h i n g a s a f o r e s a i d .
The b a s i s f o r my
Page 2 of 30
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SEIDEL, GONDA,GOLDHAMMER
& ABBOTT;F! C .
Mr.
S t a n l e y Caterbone
-2-
25 J u n e 1 9 8 7
o p i n i o n i s R e g i s t r a t i o n No. 1 , 4 3 1 , 2 4 2 r e g i s t e r e d :.larch 3 , 1 9 8 7
Eor "Power S t a t i o n " .
The r e g i s t r a n t c l a i m s a f i r s t d a t e o f u s e
o f A p r i l 3 , 1986 f o r w o m e n ' s c l o t h i n g i n c l u d i n g s w i m w e a r a n d
o t h e r goods a s l i s t e d .
A l t h o u g h y o u r c l i e n t h a s a s t r o n g r e p u t a t i o n , and
a l t h o u g h i t h a s p r i o r i t y o f u s e f o r t h e mark, t h i s r e g i s t r a n t h a s
a s t r o n g p o s i t i o n f o r arguing t h a t it has superior r i g h t s f o r
women's c l o t h i n g .
One would n o t o r d i n a r i l y a s s o c i a t e c l o t h i n g i n
a n y way w i t h r e c o r d i n g s t u d i o s e r v i c e s .
Thus, your c l i e n t ' s
r i g h t s i n i t s mark d o n o t a p p e a r t o d o m i n a t e t h o s e o f t h e
registrant's.
A c c o r d i n g l y , u s e of t h e Power S t a t i o n mark f o r
women's ( o r m e n ' s ) c l o t h i n g would i n v o l v e a s i g n i f i c a n t r i s k o f
b e i n g a c c u s e d of t r a d e m a r k i n f r i n g e m e n t .
Use o f t h e Power S t a t i o n m a r k f o r c o n s u m e r a n d
p r o f e s s i o n a l a u d i o and v i s u a l e l e c t r o n i c e q u i p m e n t r a i s e s some
i s s u e s , b u t o n t h e w h o l e I am o f t h e o p i n i o n t h a t i t i s
permissible.
A g a i n , I a s s u m e , a s I have b e e n i n f o r m e d , t h a t t h e
Power S t a t i o n s t u d i o i s w e l l k n o w n a n d d o e s h a v e a g o o d
reput-ation f o r its e x i s t i n g s e r v i c e s .
Given t h a t , i t s movement
i n t o e l e c t r o n i c e q u i p m e n t s h o u l d be p e r m i s s i b l e .
Here t h e good
w i l l a s s o c i a t e d w i t h i t s c u r r e n t s e r v i c e s c a n be more r e a d i l y
extended t o audio v i s u a l e l e c t r o n i c equipment.
T h e s e a r c h r e v e a l s t h a t M a n v i l l e C o r p o r a t i o n ' s Ken
C a r y l Ranch i s t h e owner o f t h e mark "Power S t a t i o n " f o r b a t t e r y
o p e r a t e d emergency e l e c t r i c a l 2ower s u p p l y u n i t s .
S e e Reg. No.
1 , 0 4 0 , 3 0 8 r e g i s t e r e d May 2 5 , 1976 and c l a i m i n g a f i r s t d a t e o f
u s e of November 2 3 , 1970.
I n my o p i n i o n , a u d i o v i s u a l e l e c t r o n i c
e q u i p m e n t c a n b e c o n s i d e r e d t o be s u f f i c i e n t l y u n r e l a t e d t o
emergency e l e c t r i c a l power s u p p l y u n i t s t o a v o i d a l i k e l i h o o d of
c o n f u s i o n even though t h e marks a r e i d e n t i c a l .
I r e a c h t h e same c o n c l u s i o n r e g a r d i n g t h e pending
a p p l i c a t i o n by E l e c t r i c a l C o n d u c t o r s , I n c . f o r a m u l t i p l e o u t l e t
power s t r i p .
A c l o s e r q u e s t i o n is r a i s e d by G o u l d ' s S u p p l e m e n t a l
R e g i s t e r r e g i s t r a t i o n f o r Power S t a t i o n f o r m i n i a n d
microcomputers.
G o u l d ' s mark is r e g i s t e r e d on t h e S u p p l e m e n t a l
R e g i s t e r u n d o u b t e d l y b e c a u s e "Power S t a t i o n " a s a p p l i e d t o
computer equipment is considered t o be d e s c r i p t i v e .
A
Supplemental R e g i s t e r r e g i s t r a t i o n h a s none of t h e p r o c e d u r a l
b e n e f i t s of a P r i n c i p l e R e g i s t e r r e g i s t r a t i o n .
Moreover, i f
G o u l d ' s u s e o f t h e mark i s l i m i t e d t o a p a r t i c u l a r m a r k e t w h i c h
Page 3 of 30
07/23/2007
f,lr. S t a n l e y C a t e r b o n e
-3-
25 J u n e 1987
is d i s t i n c t from your c l i e n t s , t h e r e d o e s n o t a p p e a r t o b e a
l i k e l i h o o d of confusion.
T h u s , G o u l d may b e s e l l i n g i t s
c o m p u t e r s i n t o a s p e c i a l i z e d c o m m e r c i a l m a r k e t i f i t is p r e s e n t l y
s e l l i n g computers a t a l l .
Next I c a l l y o u r a t t e n t i o n t o t h e f a c t t h a t s e v e r a l
r a d i o s t a t i o n s have a d o p t e d a n d a r e u s i n g t h e t r a d e m a r k "The
Power S t a t i o n " i n v a r i o u s c i t i e s throughout t h e Unlted S t a t e s .
Conceivably, these radio s t a t i o n s could o b j e c t t o t h e
i n t r o d u c t i o n o f consumer e l e c t r o n i c s i n t o t h e i r market a r e a on
t h e g r o u n d t h a t t h e u s e o f t h e same mark i m p l i e s s p o n s o r s h i p b y
them.
I n o t e t h a t a l l o f t h e s e m a r k s were r e c e n t l y r e g i s t e r e d ,
and I s u s p e c t t h a t a l l of t h e s e r a d i o s t a t i o n s a r e r e l a t e d o r
c o m m o n l y owned.
I a l s o s u s p e c t t h a t t h e a d o p t i o n o f t h i s mark
may b e o f r e c e n t v i n t a g e .
Thus, your c l i e n t i n any n e g o t i a t i o n
w i t h t h e s e p e o p l e would have t h e a d v a n t a g e of b e i n g a p r i o r u s e r ,
and t h e r e l a t i o n s h i p between r e c o r d i n g s e r v i c e s a n d e l e c t r o n i c
e q u i p m e n t on t h e o n e hand and r a d i o s t a t i o n s e r v i c e s and
e l e c t r o n i c equipment on t h e o t h e r hand i s a t l e a s t c o - e q u a l .
Thus, your c l i e n t should have t h e dominant p o s i t i a n .
I n v i e w o f t h e f o r e g o i n g , i t i s my o p i n i o n t h a t The
Power S t a t i o n s h o u l d n o t a d o p t o r u s e " P o w e r S t a t i o n " f o r m e n ' s
a n d w o m e n ' s c l o t h i n g , b u t i t may a d o p t a n d u s e t h e m a r k f o r
p r o f e s s i o n a l and consumer e l e c t r o n i c s a s d e s c r i b e d above w i t h t h e
u n d e r s t a n d i n g t h a t t h e m a t t e r is n o t e n t i r e l y w i t h o u t d o u b t a n d
issues could arise.
I t i s , h o w e v e r , my o p i n i o n , b a s e d u p o n t h e
f a c t s p r e s e n t l y a v a i l a b l e t o me, t h a t The Power S t a t i o n , I n c .
should prevail i f those issues arise.
I f you have any q u e s t i o n s concerning t h e f o r e g o i n g ,
p l e a s e f e e l f r e e t o c a l l me.
With k i n d e s t p e r s o n a l r e g a r d s ,
Sincerely yours,
,'.
JSG:mp
Encl.
Page 4 of 30
07/23/2007
SONY CORPORATION
I,
II.
III.
IV.
Scope of Project
Marketing and Distribution
Financial Proposal
Contracts
Tony Bongiovi and Power Station Studio is about to undertake one of the
most interesting projects in the entertainment industry that the Business World has
ever seen. His fascinating elements of this project are as follows:
A).
B),
C).
D).
Musical Overtones
Technology
Marketing and Distribution
Limited Downside Bisk Potential
When you put all of the above elements together in any business venture you
have a very strong and powerful entity. Now, put the above elements in one of the
largest and most visible industries available in the Entertainment Industry.
SONY OBJECTIVES
We want to position Sony as the printer manufacturer of Professional Recording
Equipment in both the Record Industry and also the Theatrical and Video Industry as
well as Television and Pay TV. In addition and even mare important we would like to
credit Sony with contributing in the development of the Sony/PSDMS Digital
Recording System that will recognized throughout the World by way of several
different medium exposures. This will have tremendous effects in the way of
increased sales in both the Consumer/Retail level as well as the Professional
Environment.
SCOPE OF PROJECT
In the following paragraphs I will address the above elements and prove to
support the potential for this project. The Movie was developed to help Tony Bongiovi
take his creative and genius talents in the music industry to capture other industry's
that are complimentary - theatrical, television and cable, video, international film and
now electronics manufacturing. Because of Tonys -track record and accomplishments
in both technology and musical production Bon Jovi! The film already will have
appeal through the feature of his latest band French Lick. Tony has used the same
musical format for their first album as he used for Ben Jovi, which has sold nine ail
lion albums thus far no album has ever sold sore albums in its first six months in
the history of the recording industry. Because of the timing of the album which will
dominate the musical score the two should and will compliment one another very
profitably! To further the marketability of the picture he wrapped this into a horror
script widest marketability due to international distribution and an element that
will prevent the "critics" from influencing the audiences!
Property of Advanced Media Group
Page 5 of 30
07/23/2007
To add further to the project, Tory will produce the first movie ever with a digital
sound track from set to theatre and video. This technology alone would cost anyone
else 190% of the total budget just for the sound production. This is when the project
gets interesting as far as marketing and distribution is concerned. Because of the
exclusivity of the technical elements and the "band", the marketing and distribution
should be powerful alone in even the most conventional deals.
MARKETING AND DISTRIBUTION
Now lets take this project and look at it with regards to two elements:
a). Video Industry
b). Digital recording and playing
The video industry is a 56 billion dollar industry that is in need of product, when
you look at the potential for a product that will be the first actual product that will
compliment the fast paced VCR/Stereo Entertainment components with a Musical
score that nay have enough merits of its ownyou have an amazing potential for
distribution!
The Digital and Disc Industry has proven to be the future standard for recording
and playing in due time. Because of its newness, there are more people who have
yet to hear the digital sound. Because of the visibility and exposure that will come
from this projectthis could be the first time ever people hear digital by way of
theatre and video! As to how many people? 1-10 - 50 - 100 million?
Well, what win be their first reaction? I NEED TO BUY A DISC PLAYER!
Their second reaction will be I WANT TO HEAR THAT SOUND IN MY NEXT TV SHOW,
VIDEO, MOVIE, ETC.,
We would like Sony to commit fifteen million fear three to four future products
that will follow the same format as the Mutant Mania Project so that Tony and Sony
will position themselves as the pioneer and leaders in the industry. This will not allow
composition to gain assets to the marketplace until we are all firmly situated and
profitable.
We will also assist in any way possible in the distribution of the theatrical and video
distribution.
Page 6 of 30
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THE DEAL
In a 60 second spot in the beginning of the video, we will do
commentary on Sony and its contributions to the Digital Industry and the
difference between conventional and digital recording.
I)
The spot will be a commentary with music from French Lick in the
background. The commentary will discuss the Sony/PSDMS SOUND
SYSTEM and the process by which the PURE SOUND Is developed. To
send home our point the "Difference Test" will be used. The movie
Mutant Mania will be promoted as the FIRST Feature Film to use this
system.
II)
III)
IV.
Page 7 of 30
07/23/2007
Bongiovi"
or
Power
Station
line
of
The above package will include a free video of Mutant Mania of which Sony
will rebate full price back to distribution.
Tony and Stan will receive credits for complete line:
Total will be negotiated after we have an idea of Sony margins. We want to
make money only if Sony makes money!
We will also provide a marketing package for all retail outlets that is now
being developed.
POWER STATION DIGITAL MUSIC SYSTEM (PSDMS)
Tony will include in Copyright Agreement that SONY EQUIPMENT must be
used to be PSDMS. SONY will receive "Credits on all video, theatrical,
television, and cable "PSDMS/SONY System"
Tony and Stan will also receive credits en all systems using Sony equipment
sold to other film studios Also to be negotiated after margins are figured.
We will arrange a deal where, we along with Sony, will cover exists to
install the necessary equipment in all studios. We will provide a one-day
seminar to all thirty operators of the largest theatre chains.
FINANCIAL STRUCTURE
I.
Sony will only pay for expenses to produce 60-second spots. SONY
and Power Station will utilize any and all services to help produce the
spot and will allow reimbursement for only true costs with no mark-up
excluding all of Tonys time, which will be free.
II.
Page 8 of 30
07/23/2007
merchandizing campaign of the Sony products and the sale that may
result to other film studios utilizing Sony equipment in the DNS
System.
III.
IV.
We will receive three sets of a full entertainment system Television, VCR, Stereo, Etc, that is top of the line to help during the
production of the film to be utilized by Marcia, Stan and Scott.
Sony will have first right and first refusal of all and any distribution
contracts for theatrical, video, cable, and television syndications. We
will promise not to even talk to anyone else until we feel that Sony is
not going to offer a fair and reasonable deal. We will give Sony a 5%
margin to gain a competitive edge.
The purpose of the above and all aspects of this Deal is to let the
separate entities involved maximize their profits for their respective talents;
Tory in film and music production and Sony in manufacturing and eventually
distribution of both equipment and merchandise and later video and film
distribution.
World wide marketing available after this picture through cinaworld and
Marcia. Sony will be on credits of the film world wide PSDMS? Power
Station Digital to be shared with PSDMS?
Page 9 of 30
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Page 10 of 30
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INTRODUCTION
SONY'S ROLE
MARKETING AND DISTRIBUTION
PRODUCT DEVELOPMENT
APPENDIX
I.
INTRODUCTION
Tony Bongiovi and Power Station Studio are undertaking a project that has the
potential of revolutionizing the entertainment industry. In the next few pages of this
proposal, I will outline the elements involved and how Sony can participate in this
landmark event.
The technology of the recording industry has been advancing by leaps and
bounds. We have seen the advances from monaural long playing record to stereo
record to compact disc. Now we are seeing tape systems that use digital rather than
analog signals appear, matching the quality of compact discs. What has happened to
the theatres? The audio portion of a film, is as responsible for the sensations one
experiences at a motion picture as the visual, yet many theatre's are still equipped only
for mono sound. Why is this? We feel there are two basic reasons.
1) The relative high cost of upgrading a theatre to be able to
incorporate the advanced technologies of the audio industry.
2) The lack of proper equipment for the film industry to
produce high quality digital audio tracks.
These two problems should not be addressed separately.
There is little
motivation for upgrading until the product is available and even less motivation to
produce a product that cannot be heard.
Tony Bongiovi and Ed Evans at Power Station in New York, have now made it
possible to address these problems simultaneously. Their creation of the new "Power
Station Digital Movie Sound" (PSDMS), will not only enable the film industry to produce
the highest quality audio tracks for film, but will also allow theatre's to upgrade their
existing sound system at a minimal cost.
To introduce this revolutionary new sound, Bongiovi is in the process of
producing a film entitled "Mutant Mania", which is a science fiction action horror film,
shot in a small ocean resort town in New Jersey. This film has many elements that
make it perfect for the introduction of PSDMS. The most prevalent of these being the
heavy music score by Bongiovi's latest band "French Lick".
Producing bands is
definitely one of Bongiovi's fortes. Bongiovi was instrumental in creating "Bon Jovi"
who is probably the strongest force in the rock and roll circuit today. "Bon Jovi's" third
album "Slippery When Wet", has sold more copies in a short period of time than any
other band in history.
Property of Advanced Media Group
Page 11 of 30
07/23/2007
Another is the fact that this is a horror film. The use of audio in horror films is
important to create tension, fear, excitement etc. Using a horror film also lessens the
influence the critics have on the audience.
By and large this film will stand on it's own merits. Now add PSDMS, and you
have a potential block buster event. How does Sony fit into all of this?
II.
SONY'S ROLE
Page 12 of 30
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TIMING
Timing is crucial in a project that touch so many different areas.
III.
Most of the industry by their own admission is at least two years away from an
effort to upgrade the sound in movie theatres. With the SONY/PSDMS system, other
companies may adapt easily and economically to produce products with digital movie
sound. With companies adapting to this process, the future should see the prominence
of the SONY/PSDMS insignia much the same as you see the Dolby insignia today. This
will act as a constant reminder to the public that Sony truly is a pioneer of advanced
audio visual technologies.
Sony will receive exposure in the professional market place by having the
SONY/POWER STATION equipment used in theatres and studios to produce the
SONY/PSDMS sound.
The video industry is a 56 billion dollar industry that is in need of product. When
you look at the potential for a product that will be one of the first feature films to
compliment the fast paced VCR/Stereo Entertainment components, with a musical score
that may have enough merits of its own, you have an amazing potential for distribution.
The Digital and Disc Industry has proven to be the future standard for recording
and playing. Because of the relative newness of the digital format, there are more
people who have yet to experience the digital sound. With the high exposure that will
come from this project, this could be the first time ever people hear digital. How many
people? 1 - 10 - 50 - 100 million?
What will be their first reaction? I need to buy a Disc Player!
Who's name will they think of first? SONY/PSDMS
IV.
PRODUCT DEVELOPMENT
Page 13 of 30
07/23/2007
low cost and the fact that the theatres will not have to replace their present projectors
that make digital movie sound a reality in 1988.
We feel that with consumers demanding the same quality audio at theatres, as
they have become accustomed to with their home entertainment systems, theatre
owners will have little problem investing the nominal amount of dollars involved, to
upgrade their theatres for digital audio. This investment could be as low as $1000.
With the cost being so low, the distribution company may want to consider
bearing the burden of this cost, if the theatre owners agree to show Bongiovi's next
three films.
FINANCIAL STRUCTURE
SONY will commit four million dollars for the production of Bongiovi's film to be
released in 1988. We would like SONY to commit fifteen million for three to four future
products that will follow the same format as the first, so that Bongiovi and SONY will
position themselves as the pioneer and leaders in the industry. This will not allow
competition to gain access to the marketplace until we are all firmly situated
and profitable.
Sony will only pay for expenses to produce 60 second spots. Tony and Power
Station will utilize any and all services to help produce the spot and will allow
reimbursement for only true costs with no mark up including all of Tony's time which
will be Power Station and Power Productions I (Stan Caterbone - Power Productions I)
will receive a negotiated percentage from all revenues generated from the
merchandizing campaign of the SONY/POWER STATION products and the sale that may
result to other film studios utilizing Sony/POWER STATION equipment in the PSDMS
System.
We will receive four deluxe entertainment systems - Television, VCR, Stereo, Etc.
that is top of the line to help during the production of the film.
The purpose of the above and all aspects of this Proposal is to let the separate
entities involved maximize their profits for their respective talents; Bongiovi in film and
music production and Sony in manufacturing and distribution of equipment and
merchandise and later video and film distribution. END
Page 14 of 30
07/23/2007
Power Station
Power Station was formed in 1977, in partnership with Tony Bongiovi and Bob Walters.
Power Station, within a short period of time established itself as the premiere recording
facility in the world. The studios success to a large degree is due to Bongiovi's
tremendous creative talents in the fields of studio design, production and
entertainment. The ability to anticipate what the public at large wants to hear and to
create a format that will produce a highly marketable product.
Bongiovi's creative genius became most evident with his recent success producing the
band "Bon Jovi". After years of work developing their talent and structuring the format
for their music, "Bon Jovi" rapidly became one of top bands in the world.
Bongiovi's most recent project is a band called "French Lick", which he brought into the
studio approximately two years ago. You may have heard French Lick's music in Ron
Howard's production of Gung-Ho. French Lick's music and talent have been developed
along the same format as "Bon Jovi" and have recently been showcased to the major
recording labels. Contracts should be finalized with Quantum Medium in a few weeks.
Quantum Medium is a division of MCA, owned by the same people that own MTV.
French Lick is wholly owned by Power Station, along with their first album, which gives
Bongiovi the ability to use any and all the songs from the album in the movie.
By placing the band in the movie and having the music score written by the band, we
are able to take advantage of marketing potential normally not available to other
productions. The music video for the band will be shot at the "same time as the movie
and will primarily be scenes from the movie. The release of the video will be timed to
promote the opening of the movie. The release of the songs off the first album will also
be -coordinated to promote the movie. To fully understand the marketing potential the
band brings to the project, picture what, gross receipts at the box office would look like
if "Bon Jovi" were appearing in a movie this year (Any movie). If French Lick does one
tenth as well as Bon Jovi, this movie is a guaranteed hit.
During Bongiovi's work on "Star Wars", "Apocalypse Now" and "Gung-ho", he was able
to make many of the contacts necessary to form the extremely talented group of artists
that are essential for a production to be successful.
Barbara Peters: Director/Writer/Producer
Barbara has directed many programs such as "Matt Houston", "Falcon Crest", "Cagney
and Laoey", "Misfits", "Berrengers", and "Remington Steele" to name a few. The film
Barbara directed that convinced Tony to hire her for this production was "Humanoids
From The Deep". Humanoids was made in 1978 for $ 980,000 ($ 20,000 under budget
and four days ahead of schedule) and grossed over $28 million in domestic and foreign
theatrical Sales. This was during a period in time when the video market was in its early
stages of development. A film released today that would gross $ 28 million in 1978
dollars has even greater potential for a much higher gross with the strong video market
that is available now. What impressed Tony the most with Barbara's direction of
Humanoids was her ability to bring a high degree of quality to a film on such a limited
budget.
Peter Hock: Stunt Ooordiiator/Actor/Stuntman
Peter's credits include films such as, "Trading Places", "Stepford Wives", "To Kill A
Cop", "Ghost Busters", "FX", and a host of other Films, Broadway, Musicals and
Television Shows.
Page 15 of 30
07/23/2007
There are many factors, which contribute to a projects success. If you were to take a
cross section of the movie industry to find which types of projects were most likely to
succeed, you would find that movies in the two to four million dollar range have much
greater chances of success than movies in the ten to fifteen million dollar range. The
reasons for this are quite simple. A movie in the two to four million-dollar ranges is a
high enough budget to produce a quality film but limiting the risk to the investor since
it needs less of the market share to produce a profit.
Horror movies, from the investors point of view are the safest type of movie to
finance. Horror movies have an almost cultist following. The type of audience that
attend horror movies rarely wait to see what the critics have to say about the movie.
There is a fascination with gore that this audience would rather see than have
described to them. The overseas market for movies of this genre is tremendous. In
almost all cases the gross revenues from the theatre, will be greater overseas than in
the domestic (US and Canada) market. This especially holds true for horror movies.
Over the last few years, we have been seeing a trend for movies to have a much
heavier music score than in the past. The feelings that can be invoked in an audience
from audio are sometimes as great or greater than the visual aspects of a film. With
Bongiovi's experience and past track record, we are assured of having one of the best
quality sound tracks to a movie ever made. This production could very well
revolutionize the movie industry in that this will be the first time that the sound track
will be totally digitized from the set to the theatre or home video. What this means is
that the quality of the sound, which is typically extremely poor in a movie theatre or
home video cassette, will now be tremendously crisp. This new movie sound will be
similar to the quality you would expect from a laser disc. Normally the costs involved to
produce a movie with this type of sound track would greatly increase the budget to a
point where the project would nave an increased element of risk. With Power Station,
which already has in place state of the art equipment, some of which can be found in
only one or two other studios in the world, this sound track can be produced for a
fraction of the costs that another production company would have to pay. This greatly
reduces the risk to the investor to be able to produce state of the art audio at a fraction
of the costs.
It is a very natural progression for a recording studio such as Power Station to evolve
into an entertainment complex, which includes the production of films. Power Station
currently has financing in place for a $ 3.5 million video mix studio to be built next to
the recording studio. Distribution companies are constantly looking for new sources of
product to market. With Bongiovi's track record in the entertainment industry, any
product that carries the Bongiovi label should create a bidding situation with the
distributors.
Advanced public relations work is currently being done to set the stage for negotiations
with the distribution companies. "Billboard11, "Variety", and "Box Office" have already
agreed to do articles on Bongiovi and the movie. On April 30, ABC will be airing a radio
talk show with Bongiovi that will air on 2300 stations to a total listening audience of
over six million people. "Pame, Fortune, and Romance" have also agreed to give
network TV coverage.
The home video market has rapidly been changing the potential movie profits for the
industry. A Nightmare On Elm Street was made for well under two million dollars and
has earned New Line Cinema more than $24 million at the domestic box office. In
addition, after a short video release, this production has sold over 3 million cassettes.
In the past videos were sold only to video rental stores for approximately $70 apiece.
Recently the price has been lowered to expand the market to the general public. The
video rental stores won't disappear, but they may become more like record stores that
Property of Advanced Media Group
Page 16 of 30
07/23/2007
also rent their albums. All of this translates into more profit potential for producer and
investor.
It is an extremely rare opportunity to be able to get in on the ground floor in an
offshoot of an already well established entertainment company. Any investor willing to
back this project will have first right of refusal on any future projects. The percentages
will remain the same for at least the first two projects.
Page 17 of 30
07/23/2007
Page 18 of 30
07/23/2007
producer could have trouble securing the kind of distribution commitment wanted.
The main factors here are how much money the distributor is willing to commit to
selling the picture, how much influence the producer can have on the marketing
campaign, and the distribution fee. Sometimes small distributors are able to give
more time and attention to independent pictures and offer better terms, but the
producer may have to provide some distribution expenses.
Out of gross domestic box office receipts, the exhibitor (retailer) usually subtracts
his fixed costs and then receives 10%. Out of the remaining 90% gross film rentals
received by the distributor (wholesaler), he usually recoups all or part of his costs
plus a distribution fee of 20-35%, then passes the rest on to the producer/investor.
Terms of distribution deals vary considerably. '
Box office receipts, however, only account for a part of the producer/investor's
revenues. As the enclosed figures show, the ancillary markets are at least as
significant as the domestic theatre box office. TV syndication, for instance, can
continue to bring in revenues for the next twenty years.
Demand for Product:
Today's supply comes nowhere near to matching real demand. At the present time,
there are over 18,000 theatres in the United States, it can readily be seen that
roughly 400 films produced and rated last year did not begin to meet; their needs.
Theatres are compelled to show any type of film they can obtain to keep their
doors open.
To date, independent producers are responsible for 72% of all films made worldwide. The domestic figure is 62%. The independent producer has three primary
options regarding distribution. These include the sale of the film outright to a major
national distributor, their merchandising of the film by the production company
itself, or the use of smaller regional sub-distributors who may promote the film in
their respective geographical areas. Distribution of films often relies on all' three
methods to one degree or another.
Another market, television, can consume nearly every film that has been, or is
presently being produced. If each of the three networks would show only one film
per night, they would need over 1,000 films per year. In Los Angeles area alone,
there are nearly 10,000 films aired each year in a combination of local and network
viewing time. Many films are shown time and time again because there are no new
films to replace them.
Today, virtually every film of quality has residual value in television, either by
outright sale or by term licensing. The latter is preferable since it allows the
production company to retain ownership of the negative. The time lag between
theatre release and TV sale has diminished from seven years to an average of 18
months. However, some major features such as "The Wiz" have been sold to TV
before completing a full year in theatrical release. The trend seems to be toward
purchase of 'fresh1 films, and the outlets appear willing to pay the higher costs
involved.
Because of the great demand and the outrageously competitive attitude that
pervades the networks, handsome deals are being consummated before the
production has been completed and then, by prearrangement ' with the producers,
hold the film until it has completed its theatrical run.
Page 19 of 30
07/23/2007
Forecast A
4,200,000 Gross
$ 250.00 Gross per show $ 500,000 Gross $
7,000,000 Gross
$ 300,000 X 14 days
2nd Run
Page 20 of 30
07/23/2007
Forecast A
1.680.000
9,520,000
2,856,000
6,664,000
4,000,000
2,664,000
1.332.000
1,332,000
199.800
1,132,200
These are only projections and are for informational purposes only. Any investment
made, based solely on these projections would be unadvisable as actual performance
could vary greatly.
Page 21 of 30
07/23/2007
Forecast B
Forecast B is based on a total box office gross of $ 28 million
A film that produces a theatrical gross of $ 28 million can be expected to gross at least
that much from TV, Cable and video markets. Depending on how distribution agreements
are negotiated we can expect 50% to be net profits
Forecast B
$ 10,670,000
These are only projections and are for informational purposes only. An investment
made, based solely on these prxyiections would be unadvisable as actual performance
could vary greatly.
Page 22 of 30
07/23/2007
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Page 23 of 30
07/23/2007
shall be distributed to
Page 24 of 30
07/23/2007
Page 25 of 30
07/23/2007
RICHARD C. FOX, PC
ATTORNEYS AT LAW
1015 ROBERTS VALLEY ROAD
HARRISBURG, PENNSYLVANIA 17110
RICHARD C. FOX*
ADMITTED ALSO FLORIDA
May 20,
1987
For Professional
Services rendered
in connection
with
Power
Productions
Including
conference,
preparation of Letter of Intent, and express mailing,
and follow-up telephone check.
Professional Fee
U.P.S.
250.00
8 .95
$258.95
Page 26 of 30
07/23/2007
FLATBUSH
FILMS,INC.
May 23, 1987
Sincerely,
Arlene Davidson
07/23/2007
FLATBUSH
FILMS,INC
May 23, 1987
Arrive about 3:00PM. You have the exact time since you've
booked our flights. Please let us know if someone will pick
us up or if we should take a taxi,
We'll come to Power Station and give you and Tony
copies of the script and budget, which we'd like you to read
Thursday night,
Barbara and I have a dinner meeting with a Director of
Photography.
Friday
Sunday
Monday
Tuesday
Page 28 of 30
07/23/2007
I.
Power Station
1. Bon Jovi - Tony's creation
1% - $1 Million in I987 in
Revenues
a. Format
b. Mixing
Sold 9 million albums in 6 months
2. Power Station - High Tech Award - Last 4 Years
Best in World By Peers!
3. 4 - 5 Grammys in 1987 recorded there Steve Winwood
Others: Jagger,, B. Joel, Springsteen, Diana Ross,
Madonna, J. Lennon, on and on.
4. Tony - Multi Track Recording
Defied Theory
Designed Sound - Voyeger
Produced Star Wars Album - Mixed
5. French Lick - MTV may sign Free Promotion
II. Technology
1. First Video, film, tv in digital. All first for full entertainment
2. Kodak and Mitsubish - Not till end of Decade
3. Dolby - Sony/PSDMS - $10,000 per license to any tv, film,
video, etc.
4. Only mix board that will mix albums/video's
Sell to all recording and film studios $300,000 $500,000 per console.
5.
Sony spends 9% of gross revenue on R
&D
9% of billions 2 = $180,000,000
6. Put Sony 5 years ahead of strategic plan
Disc players - Only 23% of consumers currently own a disc
player. First time to hear for how many?
III.
Film/Video
1. 23,000 theaters to sell system
2. First will sell movie and video
Add French Lick
3. Top Gun - sold 9 million @ $30.00 - $60.00 per video
$270,000,000 +
4. Horror International Film $20 - $60,000,000
Pay TV, Cable, TV - ?
Page 29 of 30
07/23/2007
Page 30 of 30
07/23/2007