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.