Friday, October 9, 2009

Smart Money Chasing Proven Producers

An article in today's Variety gives details of recent deals where financial partners other than studios are backing development efforts of proven film producers. The top line relationship addressed is Barclays Bank's reported backing of Jerry Bruckheimer's development efforts with a $20 million credit line. The article also discusses yesterday's Imagenation Abu Dhabi deal with Walter Parkes and Laurie MacDonald, the Reliance arrangement with a slew of big-name actors and directors, and Arnold Kopelson's backing by a Texas fund. There is a definite trend here.

The economics are simple. Smart money wants to be in the film business. Box office numbers continue to soar, and the returns on a successful film can be enormous. I have always shared with clients and investors my belief that the risk/reward ratio for intelligent film financing is much better than for almost any other business. That doesn't mean it's the safest investment in the world but, in my experience, the potential returns more than justify the risk of loss.

If you want to put money in films, it makes sense to bet on proven track records. Studios' recent reluctance to back the development efforts of even the best producers is creating a great opportunity for other companies seeking a smart entree to the film business.

This is further evidence of the health of our industry and another reason that those of us who make our living in this business do so with growing enthusiasm.

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