A number of former Hollywood executives, no longer part of the upper echelons of the industry, are finding themselves in the place of being pursued by cash heavy hedge funds and individuals looking for a place to put their money.
Chris McGurk, former vice chairman of MGM, is one example as he announced that he was CEO of a new studio called Overture Films, which has secured the financing for 10 films a year; with each one allotted $25 million each to produce.
There is also Tom Pollock, former Universal leader who has a deal with Merrill Lynch (MER) over a 5-year period under similar terms as McGurk.
“There is an awful lot of money out there right now, private equity money, hedge fund money flowing toward the business, with that amount of money out there, it’s very tempting for those in this business to create something with it," said McGurk.”
With studios cutting back on how many releases they are putting out, it has left a void for a lot of money that was looking to put itself into movie deals. With the recent number of failures, it's somewhat puzzling as to why this is such an area in demand. It's one of the most risky places to put your money there is.
Still, that's up to private individuals and funds that are built upon risk.
The good thing about all of this to me is that they are keeping in the range that the majority of films will need to be to have a good chance to make a profit; between $20- and $25 million each.
With so many underperformers for years, it does make you ask the question of what any of this will do to bring quality back to the industry. Of course out of 10 films a year, you probably only have to have about three good performers to get a return on. But even that's not guaranteed anymore.
If nothing else it's keeping some executives that would have been long gone in the game a little longer.
Comment Preview