New Rules of Film Finance: What Private Money Wants Now
Dealmakers reveal how to get cash today as Wall Street, investors and the wealthy remain eager to invest — on their terms
Ashley Cullins’ Dealmaker column recently covered The Death of TV’s Overall Deals (As We Knew Them), First-Look Deals: How Much, Who’s Getting Them and Why, and why You Tube stars are breaking up with Hollywood (but not their agents and lawyers).
With all of Hollywood’s crystal ball polishing and prognosticating about the future of the industry, there’s an important piece of the conversation that seems to be missing: How are the people financing the entertainment business feeling about the industry right now?
Do banks care if Inside Out 2 overperforms or Furiosa bombs? Are equity financiers still willing to place a bet on the movies as distributors and studios scale back?
Talk to enough lawyers, financiers, producers and the sales agents who represent banks (as I have), and the answers to those questions (and more) are less bleak than one might guess. Maybe even encouraging. And not just because the last two weeks of box office erased their memories of the Maypocalypse, as my colleague Richard Rushfield dubbed it.
An agent for investors boiled it down like this: “Banks are simple entities. They’re just looking for bankable collateral. They exist to make loans, and as long as they can feel confident that the loans that they’re proposing to make will be repaid, they're happy to do it. They’re kind of agnostic, in a way, about all these trends and vicissitudes in the industry that we’re talking about.”
“The banks are still pretty excited” about the right kind of projects, says Chris Spicer, who heads Akin Gump’s media, entertainment and sports practice and advises clients like Comerica, East West Bank, MUFG and Fifth Season, “even though there is all this doom and gloom at the box office.”
While the major studios largely self-finance projects off their parent company’s balance sheets, the rest of the industry taps into credit and investment capital to get anything made. We’re talking about everything from the larger indie studios — A24, Skydance, Legendary and that ilk — to smaller shops like IFC and PictureStart. Depending on the project, they are either relying on the most straightforward vanilla bank loan to a growing variety of increasingly exotic finance capital options.
But again, this is largely good news. “Even with the theatrical contraction and the retrenchment in streaming,” says a lawyer who works with indie studios, “entertainment assets are perceived as a good way to hedge your bets and diversify your portfolio.”
Regardless of the role you play in Hollywood, it’s important to understand how the money works and where the current opportunities and challenges are. (I promise I’ll keep the jargon to a minimum.) In my experience, even the people on the frontlines of making movies in Hollywood are often blissfully ignorant of the financial machinery underpinning the business.
Of course, there is one big problem: The pullback in the number of movies being made gives Wall Street and its offshoots fewer opportunities to get in the game. But even that, too, has a bright side. “I’m feeling more eagerness on the part of banks to make loans than ever before because there's just not as much activity as they would like there to be,” says the agent. “They're just looking for bankable transactions.”
In this issue, I’ll cover what dealmakers tell me about what the latest is with banks, equity investors and high net-worth individuals, including:
What film investors are pouring money into right now
The Cannes market and why traditional indie financing isn’t dead
The only thing that banks need to see to give Hollywood money
The lingering effects of the Streaming Wars on the market
The fatal error in approaching equity investors
High net-worth individuals and filmanthropy
The one thing talent and producers can do to get investment — and you’re not gonna like it
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