Wednesday, November 18, 2009

New Outlook for Film Financing?

International film finance is what Movie Beach is all about and it’s always positive to see the movie financing world expanding. It looks like more international investors are now recognising the merits of investing into Hollywood. During the recent AFM, a financing conference heard that film funding will come increasingly from emerging markets in the coming years, following on from India’s Reliance Group’s $800 million investment in Steven Spielberg’s new Dreamworks. Reliance is leading the charge, and they have also struck development deals with a number of high-profile Hollywood players to acquire a number of movie projects that may end up being co-produced with Hollywood studios. But a number of other government and private funds are emerging in Asia and the Middle East as investors grow more aware and interested in Hollywood assets.

New international investment is now flowing from groups like Abu Dhabi’s Imagenation fund which has done a number of deals with mainstream Hollywood talent recently, and is just one of a number of groups vying for attention. Qatar just wrapped up its inaugural film festival which boasted major attendees like Robert de Niro and the announcement of its own strategic investment fund. Foreign investors are likely to be choosy in the companies they work with based on capability and track record. Also important is attitude, as underlined by Ashok Amritraj of Singapore-based Hyde Park Entertainment, which is the beneficiary of substantial backing from both Imagenation and Singapore’s MDA. He observed that Hollywood has been seen as not taking care of its investors, who need to see not only positive returns but also a little respect in order to become long-term partners.

It looks unlikely that hedge fund money will return to Hollywood any time soon, and not just because of the perception of under-performing studio slate deals done by eager funds and banks in recent years. In the final analysis the institutional investors who have the time to stick with their positions will see decent profits over the lives of those assets. But the recent wave was fuelled in part by excess liquidity in the markets looking for new investment opportunities, liquidity which has long since dried up. So Hollywood, ever hungry for cash, has had to look to new sources.

Among new international deals to come out of the AFM was the announcement of a 3-year development deal for major filmmaker Chris Columbus with South Korean group CJ Entertainment. Columbus already has a shot at Reliance’s development pot and this deal gives him a funding partner after a four-year search. It’s interesting that, while the headlines were dominated by studio slate deals in the last few years we’ve seen a number of producers enter negotiations with potential investors to finance their own companies and slates, with mixed results. Some have succeeded and others continue on a seemingly never-ending round of investor discussions. There are real deals to be had but also, it seems, a lot of false dawns where even the most successful producers frequently fail to close funding deals. This is true of every industry but in our observation the movie business seems to turn up more potential investors who never deliver on that potential. We continue to believe that if the deal is the right one, it’ll get done.

The Out Of Obscurity team

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