The Saudi Spigot Tightens in Hollywood
Investment now comes with commitment to the Kingdom's rules as its $925B Public Investment Fund refuses to be treated like dark money — or the next China
Ashley Cullins writes about agents, lawyers and top dealmakers in entertainment for paid subscribers (every other Tuesday). She recently covered AI’s “Shocktember” of deals and how talent reps are adapting, how WME and CAA podcast agents are scoring nine-figure deals and why cost-plus deals are dying. You can reach her at ashley@theankler.com
International investment in Hollywood tends to come in waves. There was China from about 2012-2016, and South Korea in late 2021 and into 2022. Since then? “There’s pathetically little investment coming into the U.S. from outside the U.S,” says Greenberg Glusker partner Sky Moore. “The thrill is gone,” chalking it up to how streaming has changed everything. “You don’t need equity; you need loans, and there’s plenty of lenders in the U.S. to do that.”
With studios and streamers cost cutting with eyes firmly fixed on the bottom line, it’s unsurprising that people around town are hoping some affluent territory with entertainment aspirations will step in and become “the new China.” So the industry’s eyes have been turning to the Red Sea for any sign.
“The natural one that everyone looks to and hopes for — but doesn’t really know how to think about — is the Middle East,” explains a financial advisor with clients in the entertainment space. “There are certainly more conversations going on there now." Qatar and the UAE have both shown interest in the entertainment biz. See the $150 million investment in Peter Chernin’s North Road in 2023 and the $200 million funding of London-based VFX company DNEG this summer, respectively.
But mostly people are talking about Saudi Arabia.
Every conversation about the relationship between Hollywood and Saudi Arabia is complicated. The 2018 murder of Washington Post journalist Jamal Khashoggi at the Saudi consulate in Istanbul, which the CIA concluded was state sponsored, has not been forgotten, and crown prince and prime minister of Saudi Arabia Mohammed bin Salman, commonly referred to as MBS, has hardened his stance this year that Saudi Arabia will not recognize the state of Israel and develop diplomatic relations without a Palestinian state.
Hollywood’s attitudes, though, appear to be changing, or at the very least people are willing to keep their opinions to themselves in opportune circumstances. “There’s a particular lens everybody tries to look at them through given historical events,” says a partner at a global law firm. “The U.S. government views the country to be an important strategic ally, and yet there’s this very black-and-white perception of things. It leads to a very myopic misunderstanding of what is going on there, and there’s a far more nuanced way of looking at this.”
Or as one person put it bluntly: “Hollywood has a short memory when it comes to whose money they won’t accept and why.”
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Despite this openness, things have remained relatively quiet on the dealmaking front this year. Meanwhile, the Saudi money spigot is open . . . but only for the right projects. In September, Bloomberg reported that Saudi Arabia has spent $1.3 trillion on its Vision 2030 plan to diversify the country’s economy in the eight years since MBS launched it.
For this story, I spoke with lawyers and strategic advisors from such firms as Fieldfisher, Sheppard Mullin and SKI Partners that are steeped in international deals to get a sense of where things sit between Saudi Arabia and Hollywood and the kind of projects that may be in the pipeline. Some people opted to speak anonymously given the sensitive nature of this topic.
Most Saudi investments today look very different than they did in the brief window in 2018 when MBS came courting Hollywood — and Hollywood swooned at his star power. If the industry is going to secure funding from the country now, it’s going to have to put down roots, and publicly, and not merely take the money and run.
In this issue, you’ll learn:
How Saudi Arabia refuses to be viewed or treated as ‘Dark Money’
The lessons it seems from Hollywood’s earlier money grab out of China
Why Hollywood is changing its attitude about Saudi investments now
How Hollywood fits in Saudi’s long-term plan
What dealmaking is happening under the radar
What experts think about Hollywood as R&D to help Saudi Arabia build its own rival entertainment economy
Why taking a Saudi investment will involve a lot more than cashing a check
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