Friday, 10 December 2010

Hollywood Babble On & On #645: Billionaires, Movies, & Money

Welcome to the show folks....

There's an old saying that nothing make someone a millionaire faster than being a billionaire investing in the movie business. Forbes has an article about the decidedly mixed record billionaires have had investing in the movies. (hat tip: DorothyAtForbes)

At the very best investing in movies is a gamble, and success selling computers, real estate, or cars, doesn't mean that you're going to have success making movies. In fact being a success in one of those fields gives you a very special title when you invest in making movies.

That title is PIGEON.

The movie business is unlike any other industry in the world. The temptations are obvious, it's glamorous, exciting, creative, and sexy, and then there's the money to be made if you have a blockbuster hit. But behind those temptations are a myriad of traps and travails that could leave a once mega-rich player busted flat and wondering what the hell just happened.

So let's have a little thought experiment. Let's imagine that you, gentle fragrant reader, just joined the ranks of the might uber-rich thanks to selling off the mega-successful company you started in your garage. You have billions of dollars in liquid assets, time on your hands, and a passionate love with movies that you want to consummate.

Well, if you're going to do some consummating, you are going to need some protection. Protection in the form of advice from this smug know-it-all like me.

1. REMEMBER THAT ANY IDIOT CAN MAKE A MOVIE. That's true, anyone with money and time can make a movie. However, it takes skill, intelligence, and experience to get that movie into theaters and get people to see it. This requires intense research and planning. You need to find out how every facet of the business works. It's not like selling widgets, it's making movies, and it operates by its own rules. You have to know those rules like the back of your hand, you must know who the players are, how they operate, and who you would like to do business with.

Knowledge is power, but remember that you must...

2. TRUST NO ONE. If you're going to make movies you are going to need par
tners. Co-producers, distributors, whatever, you can't do it all by yourself without investing pretty much everything you've got. You will need an infrastructure to get the film out there, and to sell it to audiences. Now a lot of the people that will want to do business with you see you as a yokel who just fell off the turnip truck. They will promise you huge profits, Academy Awards, starlets at Sundance who will let you into their designer parkas, and anything else that will get you to sign with them.

Don't believe a word of it.

Believe what you can dig up yourself. Keep up with the research advised in step 1, dig deep, and see what lies beyond the curtain and just who can deliver on the promises, and who can't. Remember the industry is based on fiction, on screen and in the account books.

3. ONLY INVEST WHAT YOU CAN AFFORD TO LOSE. This is key. Even if your partners, are as honest as humanly possible, this is still a gamble. Treat it like a trip to Vegas. The money you brought to the table is the price of admission to the big poker game, and you must be willing and able to lose the whole pot, and walk away.

That's why you must start modestly. Keep the budgets under control, aim for commercially viable properties, and if they succeed, you can build a cushion for riskier projects. Going big budget blockbuster, or hard-core art house awards-bait on your first attempt, without a track record could backfire badly.

4. MANAGE RELATIONSHIPS WISELY. If you do make money on your project, and can keep going that's all well and good. But that doesn't mean you can start stomping around like you're King Kong. Hollywood is based on relationships, if you want to build a viable career as a producer, you have to know what relationships you should maintain, and what you should drop like a dead branch off a tree.

Diplomacy, alliances, and even knowing the right times and places to keep your friends close and your enemies closer are all important. You don't want to be known as a bully, or as a doormat, you want to be known as a tough but fair businessman that compared to you there is no better friend, and no worse enemy.

Then, maybe, you might be able to survive with your fortune more or less intact.

1 comment:

  1. Only reason why some films get made is because some billionare needs to hide money form the tax man or if not the FBI.

    The golden age of Hollywood..most of our most iconic films were funded by shady money. In the 1920's we had a lot of people who made millions from ill gotten gains during prohibition, with Capone getting nailed in tax evasion, mobbed up people needed a place to hide chase from the govt, two good places were Vegas and HW.