Hedge funds bankroll movie deals w/ H-wood producers? (link) This is nuts.

[zonkers]

Irresponsible. Who in their right mind would blindly bankroll the riskiest investment there is?

From article:

"As Hollywood power shifts more to Wall Street investors, financiers are starting to bypass studio bosses by dealing directly with successful producers.

Now, instead of deals being cut over lunch at Spago or the Grill, movies are increasingly being greenlighted in conference calls to New York.

The reason is a simple desire for more control. Wall Street financiers want a greater say over what movies they finance and who makes them; producers want more artistic independence and a larger share of the profits.


http://www.nytimes.com/2006/10/14/business/media/14studio.html?hp&ex=1160884800&en=575062aaf330420c&ei=5094&partner=homepage

[acmejack]

1. OPM!

It has come to pass...

[Wickerman]

2. Makes sense to cut out the studio execs

that is were a lot of the fat is and where some of the worst decisions are made. However, a movie is, as you say, a horrible risk. Your odds are better in Vegas.

[zonkers]

4. They say what $ Silver's movies made but nothing about his bombs or

what they cost. Reminds me of that Jackson Brown lyric... "you like about the losses, you exaggerate the wins"Both Silver and Reitman have had a crapload of bombs.

[Somawas]

3. The risk in film is actually pretty small.

Practically all of them eventually will make back their production budget through dvd sales, tv licensing, etc. Most smaller budget pictures, educational film, etc, make decent money.

[papau]

5. true -but it can be a 5 year investment before profit with no liquidity-or

have I gotton bad info from my "investment advisor"?

[aquart]

7. Liquidity is not an issue for hedge fund participants.

What with the trust funds and all.

[aquart]

6. Hedge funds are places for the indecently rich to store money

because they are insufficiently taxed.

And if it tanks they get to write it off as a loss, offsetting obscene gains elsewhere.

Win-win, yes/no?

[papau]

8. Still the loss by the rich in one hedge fund in August of $6 billion was

large enough - even noting all the hidden assets in trusts of trusts of partnerships with trusts owned and shared in the offshore partnership that isn't a partnership under US Law - to be noticed - even by the folks in the 13,000 families (top 1/10 of 1 percent) that run this place - granted the 400 Forbes billioniares would each have such a small percentage of their assets in just one hedge fund so that it will not be noticed by them.

I believe I read that it might make the years return by the hedge fund component of the assets of ssome of the newly rich drop from 25% to a range of 15 to 20%.

I, on the otherhand, chose badly my equity actions this year and hope to get back to even - or at least lose less than 10% - for the year.

[Toucano]

9. Films are far from the "riskiest investment there is".

International stocks and real estate stocks are riskier.


Even movies that bomb at the box office, make money on DVD, HBO, and network licensing. Low budgets films can produce a wonderful rate of return.

[Mayberry Machiavelli]

10. I suspect the investors will be rich people carried away with the idea of

their connection to the movie industry.

I agree with you that I can't imagine a riskier investment than movies (well maybe airlines, LOL). Even some that are wildly successful still wind up being "unprofitable" through the magic of Hollywood accounting, so that the talent can't make any money off "net" profit percentage but only "gross".