Monday, 22 September 2008

Hollywood Babble On & On #171: Money Makes The World Go Round Unless You're Paramount

Yes, the stock market is having a bit of a freak-out this week. That's inevitable as profit taking mixes with hysteria, but like I said before, it's not the end of the world.

And as the always ebullient Nikki Finke reports, while Paramount is forced to find investment money on a picture by picture basis, Media Rights Capitol, an independent production company, had their application for a $350,000,000 line of credit oversubscribed by potential investors.

Now why is a relatively small company fighting off investors, while such a large company with such a storied history is having to go, hat in hand, for money?

Well, it's simple really.

Despite the roller-coasting of the stock
market, the money is out there. In fact, expect a rash of buying, as people buy up woefully undervalued assets at bargain basement prices. There are also billions of dollars in international investment capital is being pulled out of Russia every, due to the aggressive, autocratic, and kleptocratic Putin regime. The oil-plutocrats of the Middle East also hold billions in their cash reserves. All that money has to be put somewhere where it will grow, and despite the recent upheavals America is still a model of stability in the investment world, and movies a tempting and glamorous target to invest in.

Movies are high risk as an investment, with a lot of films failing to make a profit, but also high reward. One blockbuster could make your year. Plus there's the cachet of being a "big wheel" in the movie business, which,
for some reason, makes you out as being more important than a cancer researcher or peace-making diplomat.

However, dealing with major Hollywood companies ranges from annoying, to frustrating, to downright maddening. While people can expect to lose money if the film fails, and can accept that as being part and parcel of a risky business, what they can't accept is when the film makes a bundle at the box-office, and they still lose their shirts because the CEO's investment in Bolivian tin-mining got nationalized.

Paramount didn't help themselve either by almost becoming completely dependent on Dreamworks, and Marvel for major releases, collecting only distributors fees, and having a lot of their in-house productions vanishing without a trace. And even their biggest in-house hit Indiana Jones & The Kingdom of the Crystal Skull left Paramount with the steam off of Spielberg and Lucas' pee once their massive dollar-one gross cuts were taken.

That ain't healthy.

MRC is comparatively small, and comparatively new. It has potential to be very lucrative, and its relatively small size means it can't bury investors the way the major studios do daily.

So right now could turn out to be a good time for an independent producer and/or distributor. The money is out there, it's looking for a home, and doesn't want the hassle of dealing with the big boys.

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