MEDIA SYSTEMS INTEGRATION FINANCING

Many of today's media technology projects integrate a wide array of different technologies including presentation, projection & display, sound reinforcement, lighting, HD cameras and HD screens, computers and servers, communications systems (such as wireless microphone systems), conference room equipment, mixing consoles and automated or manual control systems, security systems, digital display networks, plus all other costs such as software, mounting brackets, wiring, shipping, installation, training, warranty and services. Virtually all costs including labor may be included in the financing however most equipment finance lenders exclude real property such as land or permanent buildings from such financing.

Media Systems Integration Financing offers the bundling of most project costs into a single monthly payment to simplify budgeting, and planning. At the same time Media Systems Integration Financing spreads project costs to match the timing of revenues and cash flow. This spreading of costs and delaying of costs to future payment periods acts as a "hedge against inflation" because it allows for payment of current costs (payments) with current dollars and future payments with future revenues.

Media systems integration projects can be found in churches, stadiums and arenas, corporate conference rooms and training facilities, broadcast studios, and live staging, event and concert venues. Increasingly media systems integration are installed with retailers, shopping malls, restaurants and nightclubs.

In many cases interim financing or "interest only" is provided during the build-installation phase followed by fixed-rate, firm-term financing for 12 to 84 months. Generally financing is provided at competitive rates but without common bank encumbrances such as "blanket liens", restrictive covenants, or annual fees.

Bridge Loans & Short Term Financing As a Budget Solution

For many churches, religious broadcasters and worship technology firms the cost of new media technology such as sound reinforcement, digital display technology, projection systems, lighting, and HD television broadcasting systems can be a "budget busting" purchase. For many mid term financing from 12 to 84 months is a solution that spreads the cost of technology to match the timing of revenues, tithing, contributions or donations. However when an organization needs the technology today and knows it can fund the cost from a future budget (for instance 8 months from now)....the idea of short term financing may allow the immediate acquisition of the technology while forestalling payment to the future budget funding date. Media technology manufacturers and resellers can work with specialized financing (such as National City Media Finance) to create short term financing (one to 12 months) that allows "bridge financing" where the customer may make nominal payments, interest only payments or sometimes no payments' until the budget funding date. This allows immediate acquisition and use of the technology while suspending payment until the future budget date. For instance I currently work with several manufacturers their dealers and resellers to provide this type of financing, sometimes even with 0% financing options for 12 or 24 months. This allows the customer a special financing that is usually approved by the board, executive committee or congregation. For more information on bridge financing please contact me directly at russ.munson@nc-4.com.

Don't Underbudget & Overspend on Church Media Technolgy Projects

I recently held "Financing Alternatives For Church Media Technology" workshops at the National Association of Broadcasters convention and at the National Systems Contractor Association (at Infocomm) both in Las Vegas. During these one hour workshops we discussed how churches can "stretch the budget" for broadcast, AV and media technology projects using specialized financing geared specifically for Church, House of Worship, and Media Ministry projects. One important element that we discuss is something that I have repeatedly been told by contractors and systems integrators who work with churches on broadcast and media projects. That is that many churches have a tendency to want to "scale back" technology projects to "fit" the current annual budget, but that in doing so they often "cut to the bone" in ways that results in future over spending or the need to replace technology sooner than necessary. Specialized financing for churches is a tool to help churches stretch budgets and "right size" projects. In many cases it is not simply the availability of capital.....but the creative use of capital that makes the financing add value to the budget process. The goal of doing the project "right" the first time, can save tens of thousands and sometimes hundreds of thousands of dollars in a modern media technology project.

Media Technology In Church & Ministry

Churches are leaders and early adapters of all types of media technology. With over 400,000 churches in the U.S. and with purpose and dedication of Christian evangelism churches have adopted and adapted media technology as a means to help reach the congregation and grow the ministry. Sound, audio-video, HD television broadcast, digital display, wireless, video projection, all are technologies being implemented and harnessed at today's churches across virtually every denomination. Sound and Communication magazine completed its 11th annual Worship Center Survey in which church respondents indicated that over 94% of churches will install or upgrade media technology within the next 18 months. In 2006 alone almost $8 Billion was spent on sound technology in U.S. churches.

Many contractors and systems integrators who specialize in church media projects report that although most churches recognize the value of media technology to the growth and evangelism of the ministry and desire to complete media technology projects that many churches "under-budget and over-spend" in the area of equipment, technology and systems. At first this sounds contradictory yet when you consider that many churches fail to adequately budget for the "right size" media technology project, then end up "piece mealing" or patching together various systems (often not compatible) over several months or years one recognizes the risk and probability of repeating costs multiple times that result in poor stewardship of finances.

Partial financing is a means to help churches "stretch" budgets and "right size" media technology projects. In a recent church project the media equipment costs were $450,000. The church's budget $250,000. The vendor and financing source worked together to offer 0% financing for 24 months on the remaining $200,000 so that the church would not undermine its media systems objectives. The monthly payment was $8,333 which equaled a weekly portion of $2083 each week. The church has 2,000 in its congregation which equates to approximately $1.00 per week per each member.

In summary media technology helps define and communicate a clear purpose in today's House of Worship. It is a means to share The WORD, to reach the congregation and expand the ministry. The right budgeting for the right-size project is essential to helping ministers and their congregations come alive with the passion of belief achieved through a complete media ministry. Media technology is an important tool to help pastors and church leaders guide their congregation to deeper faith and commitment.

CASH IS KING

Cash is King! Cash is even more regal in difficult times. In our current economy broadcasters and media technology users may feel it more prudent to hang on to cash (and capital). They are more cautious about investing in needed equipment and technology. Subsequently they delay or drag out equipment purchasing decisions, hoping to stall until revenues and cash flow get better. There is "pain" associated with parting with cash or capital.

During this period, when financing costs are at historic lows, NOW is a great time to introduce financing alternatives, as a business solution, that spreads the cost of technology to match the timing of revenues and cash flow (current and future). Spreading the cost of equipment and technology is less "painful" because it allows retention of cash and helps preserve capital and equity. In effect shifting the budgeting from the Capital Budget to the Operating Budget facilitates both capital retention and investment in new and needed technology.

Remember that while Cash is King low-cost financing is a means to retain cash and yet make the investment in broadcast equipment and media technology that, in turn, helps cash grow.

Financing for Faith Based Broadcasters

With the National Religious Broadcasters convention and trade show in Nashville March 8th to 11th I thought it would be timely to discuss technology financing alternatives for this segment of the broadcasting community. Religious broadcasters often combine traditional advertising revenue, especially local ad revenue, with a mix of contributions and donations from members of their respective worshiper communities. Larger broadcasters may cull support from national and even international members, worshipers and contributors. The technology transition to digital and HD as well as the need to upgrade to modern billing systems, station automation, camera systems and HD radio broadcast for both TV and Radio broadcasters may create the need for financing that supports or aligns with a specific broadcaster's revenue generation method. For instance religious broadcasters with a steady donor base may find that short term, low-cost, financing which allows for prepayment at any time is most cost effective. Other broadcasters find that the ability to spread the cost of technology over months or even years......aligns with their revenue, donor and contributor timeline. As a "non-profit" religious broadcasters often must balance the need for financial stability against the mission to fully fund programing. Again, financing, properly utilized may be an effective tool to help manage technology costs and growth initiatives.

Debt vs. Equity

The saying goes that "debt is almost always cheaper than equity". Equity is the ownership by yourself or others in your Broadcast enterprise. In most cases Equity is traded for investment. However equity is expensive IF your broadcast enterprise is growing in value or expected to do so.

Debt is an investment in the enterprise usually without giving up equity. On the surface Debt may seem more expensive than equity yet it is rarely so. The investment of cash or capital in broadcast equipment is a use of equity since it dillutes equity. In cases where cash is used, vs. debt, the cost of financing (using ones own cash) represents a loss of investment return (ROI) that the organization would have received on its own capital. Financial managers must ask themselves: "If my enterprise can attain a 10% return on its capital, and obtain financing at 6%,why not leverage debt in acquiring depreciating assets and retain our own capital for investments that appreciate such as organizational growth, projects, acquisitions, people, advertising, etc.