Tuesday, July 15, 2008

Movie News

So, I'm leafing through the office copy of the FT, and chance upon their article about Paramount's inability to close a $450 million film financing with Deutsche Bank. Deutsche, see, has closed its film financing unit in the face of terrible market conditions, and this leaves a slate of Paramount films in trouble. Here's the reporter, Matthew Garrahan:

Under the Deutsche deal, which would have also covered Tropic Thunder, the new Ben Stiller comedy, and The Curious Case of Benjamin Button, which stars Brad Pitt, the syndicate assembled by the bank would have taken a 25 per cent stake in each of the 30 films.

I share the news with some colleagues, partly because Transformers 2 might be in trouble, but also because one fewer Ben Stiller movie making eyeballs bleed would be quite the silver lining. Turns out that not only is the movie already made, it's scheduled for release on August 13. It also looks rather entertaining, from what I can tell of the trailers.

So, obviously, here's by question. Are we just talking about Paramount's ability to sell the movie or part of this to the defunct financing vehicle, in which case I'm guessing $450 million would cover maybe three of them, or is the vehicle taking a minority stake? If a minority stake, then how much can this do to reduce the studio's exposure to a film's performance?

Now Hollywood's finances are opaque as all hell, one of the multitude of barriers to entry to this crazy, crazy town. All I have to go on is TT's website, which lists Dreamworks Pictures as the owner of the film's copyright. Dreamworks is a subsidiary of Viacom, like Paramount, and Paramount distributes its films. So what does the collapse do to the fortunes of a film 29 days away from its release? Leave it on Paramount's balance sheet? Confusingly enough, Dreamworks is apparently looking to raise financing to go independent. It's possible, though not likely, that the Deutsche money would be used to buy the films from Dreamworks.

My guess is the reporter isn't too clear on the arrangement either:

But if the studio fails to revive the deal with another bank it could force Paramount to seek funds from Viacom, the media conglomerate that owns the studio, to produce the titles. This would expose the company to greater financial risk if the films fail to perform as expected.

Could be that "produce" has a slightly more expansive meaning than that normally ascribed to these things. And this looks more like some kind of risk-sharing arrangement with rather vague terms. But I'm inches away from declaring that the FT's man pulled the list of forthcoming films from his derriere.

[UPDATE: Lord bless Journal, which omits both Transformers 2 and Tropic Thunder from its list of affected films, and notes that two other movies that the FT cites, the latest Star Trek and The Curious Case of Benjamin Button, are co-financed with other studios.]

I went to see Hellboy II last night, the first film I've seen in several months (baby, see), and probably the last for several years. And my was it rubbish. A plot lifted from the last Transformers film (old-looking metally object has the power to destroy the world!), dialogue that was merely serviceable (Jeffrey Tambor's lines could have been so much better), and an aesthetic that's essentially an amalgam of Guillermo del Toro's steampunk 'n clockwork ticks.

In these circumstances, it's traditional to note that, well, this is an comic book adaptation for an action movie, and well, what do you expect? The answer, to be honest, is Iron Man. Now that was a well-written, fun action movie. Cronos IX is a little more creaky, though undeniably fine-looking.


At 2:31 AM, Anonymous Anonymous said...

It is possible to invest money in a slate of movies - despite the fact that some have already been produced, you moron. The money you invest is apportioned to each film and the returns you generate will correspond to the success of each film in the slate. It doesn't matter that Tropic Thunder has already been made and is about to hit theatres: if Deutsche has assembled a syndicate contributing $450m to 30 pictures its returns will be based on the performance of each movie. The inclusion of films such as Tropic Thunder is largely for accounting purposes.
I work in the biz and know all about the deal in question. The FT reporter got it 100 per cent right. spot on about the deal.

At 9:32 AM, Blogger Gringcorp said...

Yes, you're right - this post wasn't my finest hour, and I should have updated it after doing some additional reading. That said, the thrust of the article - that the films were in danger of not getting made - was misleading. If they've already been made, we're talking about what the deal's failure means for Paramount, or someone else's, balance sheet, not Ben Stiller's resume.

At 5:29 PM, Anonymous Anonymous said...

Are we reading the same article? It didn't once say that the films were in danger of getting made. It said that the deal's failure may mean Paramount has to rely on Viacom for its cash needs than alternative financing sources that allow it to offset risk.
PS. I'm sorry I called you a moron.

At 6:08 PM, Blogger Gringcorp said...

Nah, it's fine. It's one of the stupidest posts I've written in a long time. I just thought "provide funds for" made it sound as if this was to get them made rather than get them off balance sheet. Quite a minor quibble, I'll agree, and I think the thrust was immediately obvious to someone who's familiar with the industry, but Mr. Amateur here, despite being intimately familiar with the off balance sheet acquisition financing of big tangible assets, suddenly can't comprehend doing the same for movies. I suppose it's mostly because I can't believe that debt would be so much cheaper than equity in the movie business.


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