Wall Street Banks Back Off Plans To Finance Films

from the no-motion-pictures dept

In the past year or so, there's been a surge of interest on Wall Street in financing Hollywood films. As the cost of making motion pictures continues to spiral higher, it makes sense that studios would look beyond its traditional networks to raise money. That being said, we had some hope that investment banks and hedge funds could be a positive force in the industry, since they'd likely be reluctant to write a blank check for some of the big budget, big star boondoggles that have characterized the industry of late. Well, it looks like we'll have to wait awhile before we learn how this plays out. The credit crunch has prompted Goldman Sachs and Deutsche Bank to postopone plans to raise $1 billion to fund films at MGM. The banks could still do the deal if they see a lot of investor demand for it, but that seems pretty unlikely in light of current conditions. Meanwhile, the Hollywood studios might have to make do with a bit less cash.

Filed Under: credit crunch, finance, hollywood, wall street
Companies: deutsche bank, goldman sachs, mgm

Just Blame It On The Subprime Blues

from the otherwise,-everything's-just-fine dept

Although the effects on the tech industry have been muted, we've been following the impact of the mortgage/credit mess that's been roiling financial markets for the past few weeks. While many folks (particularly bankers and regulators) would like to claim that the situation is contained, every day brings more evidence that it's not. Michelle Leder has been tracking the number of times companies are using the word "subprime" in their SEC filings and she's found, not surprisingly, a spike in the word's use. What is a bit surprising are the companies that have invoked the situation to explain their performance. It's not just financial firms, as you'd expect, but companies as diverse as restaurant chains and wireless operators. The question, then, is whether this is simply an excuse for bad performance (like how retailers always claim they were hurt by the weather), or whether this issue has really started to creep up on companies in some way or another. At this point, it's probably a mix of both, although it wouldn't be a surprise to see a lot more companies affected by the situation than people currently expect.

Filed Under: credit crunch, subprime

VeriSign Resolute On Buybacks Despite Warning Signs

from the double-down dept

The evolving credit crunch has forced some tech companies to to suspend plans to buyback their stock due to an inability to raise the necessary cash. Either way, you'd think that in light of current conditions, companies would be hesitant to leverage up by expanding their debt levels and removing some shares from the market. But current conditions don't seem to be much of a deterrent to some firms. VeriSign has announced the successful sale of $1.1 billion worth of convertible bonds with the proceeds earmarked for share repurchases. Although the move carries risk, Wall Street analysts tend to love this kind of move. One analyst lauded the announcement, claiming that VeriSign will now have a more "mature capital structure". The thinking is that VeriSign is a large company with slowing growth and so the quickest way to maximize returns is to take on debt and bet on itself. If the company executes well, then the move will look brilliant. But it leaves the company little to no margin for error should things not go exactly as planned.

Filed Under: buybacks, credit crunch, leverage
Companies: verisign