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Could Wall St. Be The Savior Of Hollywood?

from the arbitraging-celluloid dept

Fri, Sep 15th 2006 12:07pm — Joseph Weisenthal

Hollywood finance has been a hot topic in the media lately, as more people come to realize things like that returns on films are characterized by randomness, independent of the high paid stars that take up a large share of film budgets. And as more of the intricacies and surprises of the industry come to light, it's not surprising that more and more financial institutions from Wall St. banks to hedge funds want to invest in films. At first blush, this might be surprising, considering that the industry is struggling to find its place in the changing media landscape. But in a way it makes perfect sense. Few people realize that Hollywood studios are fundamentally banks; they do a few related things like promotion and distribution, but their main purpose is to connect filmmakers and film investors. But at the moment, they're not managing their money all that efficiently. This, then, is an opportunity for hedge funds to exploit. The question is whether funds will correctly sieze upon the opportunities. If they recognize that it's a poor idea to make major multi-film deals with stars who don't add much value, and that many production costs can be dramaticially reduced with the help of new technology, they may help impose a much needed spending discipline on films. But, on the other hand, it's possible that the hedge fund types won't appreciate the situation, and see themselves as filling a funding void for blockbusters and their spiraling budgets. This approach will do little to improve the culture and make the industry more competitive. Either way, some will argue that if filmmakers are forced to bow to Wall St., then quality will inevitably decline as everything becomes about profit. Yet Hollywood today is having this problem, and ultimately, a film can only make money if people actually want to see it.

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10 Comments

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Anonymous Coward, 15 Sep 2006 @ 1:13pm

I'm all for ANYTHING
That will reduce the status of celebrities that don't contribute to society.

It's completely sad that entertainment professionals (Actors, sports players, nascar drivers, pop singers... They are all leaches on the face of humanity) make more money than Doctors, engineers, people that are actually DOING SOMETHING WORTHWHILE.

I don't think anyone should get "rich" entertaining. I definitely don't think a movie actor should get millions of dollars for a single movie.

And no, Angelina Jolie's false prominade does nto constitute "helping society". Her power trip is all about showing how celebrities can take over foreign nations as it suits their needs.

Sorry for the troll.
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Anonymous Coward, 15 Sep 2006 @ 1:14pm

Tyops ...
opportunityfor ... funding void for for blockbusters
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Anonymous Coward, 15 Sep 2006 @ 1:24pm

Vacuous Celebrities
You're out of luck I'm afraid if you're hoping that anything will "reduce the status of celebries that don't contribute to the community."

The problem is that"the community" is, on a whole, pretty stupid, non-contributing, and tends to seek idols that they can identify with.

Who should we idolize? Politicians are the slimiest lot, and those most successful are generally the ones that the peasants can identify with best.

The filthy rich? Though these people are often envied and even watched, people idolize them for their power and wealth, not the (sometimes) admirable traits that got them that power and wealth.

Scientists? Great thinkers? Well, the problem there is that most people don't have a clue what they do, or what they are talking about, which makes them tough to respect. Even Albert Einstein isn't respected for his contribution to society, so much as his supporting role in the PR-spun story of democracy over communism through the means of fantastical new explosives.

/Don't read popular new
//Don't vote
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Danno, 15 Sep 2006 @ 2:07pm

The suggestion that simply because you can't understand the benefit of Entertainment to the rest of humanity indicates only that you have never derived joy or inspiration from the work of an artist.

Not every actor who is paid an exorbitant sum of money deserves it, but likewise, not every bussinesman who takes an exorbitant sum of money deserves his share.
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- Celes, 15 Sep 2006 @ 3:43pm
  
  Re:
  "Not every actor who is paid an exorbitant sum of money deserves it..."
  
  Can you name any who DO deserve an "exorbitant" wage?
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- Anonymous Coward, 17 Sep 2006 @ 2:15pm
  
  Re:
  There is no such thing as an "exorbitant sume of money". If two people voluntarily agree on a monetary figure, it cannot be exorbitant. Studios can gripe all they want. If they don't like it, they can choose to stop paying the going rate. It's how the free market works.
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ScytheNoire, 15 Sep 2006 @ 7:57pm

i just think getting investors from outside the studios is a great idea. face it, we've seen movie studios waste a lot of money on big time flops, simply because the studios are run by schmucks (just look at the current state of next gen optical and DRM). so i think outside money can't do any worse than the industry is already doing. and if you get financial firms involved, they also come with their own high-power lawyers, and they won't put up with the corruption that is currently plagueing the creative industry (see RIAA and MPAA).
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hoeppner, 16 Sep 2006 @ 7:00am

does this mean that CNN will eventually stop spending 5-20 mins out of the hour talking about people that have absolutly no signifigance to real life?

steve irwin did have some siginifigance because most of his work was for awareness and charity, but still you would've got drunk in the first hour of playing a drinking game for his name. and that doesn't count pronouns. way overkill.

and its not just the CNN's that waste that time its every national news in the US... internet news media is soo much better, granted this is more of an editorial site in most cases.
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Anonymous Coward, 16 Sep 2006 @ 9:21am

opportunityfor is a word now?
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Mousky, 17 Sep 2006 @ 2:12pm

Hedge funds not necessarily so 'efficient'
Hedge funds only seek to maximize return with minimal investment over the shortest period of time. There is nothing wrong with this, but hedge funds could care less about the quality of a product or service so long as stock value increases or some component of a company makes it a takeover target. Hedge funds want companies to do what is in the best interest of the hedge fund not the company they are invested in.
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