Thursday, 1 December 2011

Hollywood Babble On & On #845: Maybe It's Time To Cut The Cord

Another day, another lawsuit.

This time it's the Melrose II investment fund, and it's suing Paramount Pictures.  According to Melrose II they invested $375 million into 29 Paramount productions, including the Transformers franchise.  Those movies raked in  about $7 billion in box office and home video revenue, and Melrose II says all it got was the steam off Paramount's pee.

Paramount denies any malfeasance or shenanigans, but, to be honest, I have to take their claims with a pound of salt.  The movie industry literally sets the standard for shady accounting, missing profits, and investor dissatisfaction. They make Enron look like amateurs, because Enron's games hit a wall and destroyed itself, while the Hollywood studios continue to chug along.

Investing in movies is high risk under the best of circumstances.  Making the profits disappear through mathematical & contractual legerdemain does not improve that fact.

The studios are relying on the simple fact that investing in movies is very tempting.  Though high risk, has a very high potential for reward when a picture hits it big. Then there's the glamor that comes with being involved in the industry that literally defined glamor, and you'll have a lot more luck with the starlets if you tell them you're a movie producer than if you tell them that you own a chain of discount unpainted furniture stores.

Now the other day I wrote a tongue in cheek piece about how the billionaires of the world should give me money to make movies. Well there was a grain of seriousness in that big jiggling wad of ironic inanity.

That grain of seriousness was that the people who invest in movies need to either seek out, or create an alternative when it comes to investing in movies.  The major studios are money pits, and the independent film business has too many operators who are either fly-by-night schemers, or reckless egomaniacs.

Back in the day, when the economy wasn't as dysfunctional as it is today, investors were more willing to let such shenanigans happen, because they could use them as a tax write off.  

However, things have changed.

Nowadays investors need to have a return on every investment to keep them in vittles and vacation homes.  They need stability, simplicity, and most of all integrity for their investments.

The current movie business just aren't delivering those qualities, so maybe it's time to cut the cord, and those investors finding, or building something new.


  1. What's the over/under on how long before the government regulators start taking an interest in Hollywood's accounting principles?

  2. Depends on the outcome of the 2012 election. If the Republicans get control of congress & the White House, they might start sniffing around Hollywood's money for the double benefit of petty revenge, & the guarantee of headline grabbing Senate hearings.

  3. dcmatthews20101/12/11 11:25 pm

    Well, if it takes petty revenge to get such an investigation started, so be it. Democrats aren't going to be sniffing around their biggest boosters' books (however many sets there are).

  4. Blast Hardcheese2/12/11 10:23 am

    (Picture me standing on a wind-swept clifftop, staring into a gathering thunderstorm. My cape swirls dramatically about me, as I point and intone...)


    Seriously, this is something I've wondered about (and occasionally mentioned here) for years. When are the real money people going to get fed up with the Hollywood system? Getting to party with starlets only goes so far when every other aspect makes going into loan sharking look nice and respectable.

    I think this is the first pebble of the avalanche.