- My Exclusive Interview With Bob Iger
- Activision Blizzard's "Modern Warfare 2" Sales Break Records
- Disney's CFO-Theme Park Chairman Executive Swap
- What to Expect From Disney Earnings?
- Ahead of Earnings Disney Restructures Studio
- Murdoch Lashes Out At Google
- Why Google is Paying $750 Million for Ad Mob
- Modern Warfare 2's Record-Breaking Launch
- Food Network, HGTV Drive Scripps Networks' Upside Surprise
- Disney's 'Carol' Tests Widest 3-D Release Ever
More Videos
- My Exclusive Interview With Bob Iger
- Activision Blizzard's "Modern Warfare 2" Sales Break Records
- Disney's CFO-Theme Park Chairman Executive Swap
- What to Expect From Disney Earnings?
- Ahead of Earnings Disney Restructures Studio
- Murdoch Lashes Out At Google
- Why Google is Paying $750 Million for Ad Mob
- Modern Warfare 2's Record-Breaking Launch
- Food Network, HGTV Drive Scripps Networks' Upside Surprise
- Disney's 'Carol' Tests Widest 3-D Release Ever
RSS FEED
MOST SHARED
- Seeking Innovation in Health Care
- Driving Health Care Innovation
- Downturn is Prime Time for Airport Infrastructure Projects
- Cramer: 5 Earnings Reports to Watch Next Week
- Next Week’s Top IPO
- Hedge Fund Billionaire Paulson Reports New Citi Stake
- Has Twitter's Finest Hours (Seconds) Come and Gone?
- Gold Rises, Nears Record High as Dollar Drops
- Web Extra: Where Will The Next Bull Come From?
- Microsoft's Bill Gates Praises Apple's Steve Jobs For 'Saving the Company'
- Dollar is Not Plunging—So 'Calm Down': Market Strategist
- Strategists Say Markets Have More Upside — But How Much?
- Hirschhorn: Risk-Averse Traders
- Roginsky: A Funny Thing Happened on the Way to Financial Reform
- This Year's Biggest Thanksgiving Leftover: Cash
- TV Series Inks Unique Deal For Fight
- First Time Buyers Rescue Housing: Realtors
- Dollar General Trades Higher After Its IPO
- Fed Reform? Not So Fast.
- Oil Next Week: What Traders Will Be Watching
- Hedge Fund Billionaire Paulson Reports New Citi Stake
- Cramer: 5 Earnings Reports to Watch Next Week
- Court Rejects 'Clawbacks' for Alleged Stanford Victims
- Tax Credit Sparking First-Time Home Sales: Realtors
- Investors Cut Back US Stocks for Bigger Growth Abroad
- Cities With the Most Home Price Reductions
- White House Plans to Freeze Spending to Cut Deficit
- This Year's Biggest Thanksgiving Leftover: Cash
- Oil Next Week: What Traders Will Be Watching
Media Money
Text Size 
 |
CNBC.com |
The credit crunch is taking its toll on Hollywood. Deutsche Bank's $450 million film financing deal with Paramount Pictures, a division of Viacom[VIA
Loading...
()
] is falling through. The financing deal was meant to pay for up to 30 films, with Deutsche Bank proviing a 25 percent equity stake in each movie.
These are movies you've heard about, like the sequel to "Transformers" and "Star Trek" and many of them are already in production.
Now Deutsche Bank [DB
Loading...
()
]is closing its film financing unit, and it couldn't close its Paramount deal because it couldn't find adqueate investors to take on the senior debt level of the fund. These days potential lenders are avoiding asset classes that have less than that top triple-A rating. Can you blame them? But it's certainly a far cry from the crush of investors eager to pour money into Hollywood that we've seen in recent years.
These movies will still get made--Paramount will either find funds elsewhere, or will finance them entirely themselves, taking on more risk. These deals have been a great way for Paramount as well as other studios mitigate their risk, while also charging the investors a fee, making a bit of money on each investment. And will their be other investors? Probably. Right now Steven Spielberg is in talks with an Indian company to potentially help finance his next slate of movies. I wouldn't be surprised if the next spate of financing comes from overseas.
Why won't Paramount just make fewer movies? First of all, that's not the plan, and most of these films are already in the works. Second, Paramount has serious infrastructure it wants to make use of; and the numbers of executives, assistants, marketing flaks, is designed to support a certain number of films a year.
If all of a sudden it can't afford to make that number, it has lawyers or development execs who aren't working for a bit of time. And unless it's planning to overhaul its whole system, cutting the number of movies it aims to push through its pipeline every year, then it doesn't want to shake up its infrastructure.
For now, I'm looking out for a new financier, or financing option to swoop in. If not, I bet Paramount will take on the additional cost and bit of risk, itself.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes