How is the state of Hollywood with the credit crunch upon us? So far it looks like it's not too bad. Major studios have already received funding for the next several years, so it shouldn't impact them too much.
For the studios just under them like Lionsgate, they're well capitalized too, closing around $340 million right before the credit crisis began.
"The credit market crunch is not going to hurt those people that are a major studio, or a well capitalized mini-major like us," said Lionsgate Entertainment Corp. Vice Chairman Michael Burns.
The Weinstein Co. also announced in August that it had secured $285 million in financing for Asian-focused films, a total of 31 titles; 21 for cinema and 10 for direct-to-video release. They will reflect the region's "unique culture and showcase the talents of leading Asian filmmakers," said the company.
For now, it looks like the independents will be the most hurt by the credit crunch, with fewer companies willing to take the risk. Money will also be more expensive.
Larger projects are also starting to be put on hold by some, as Metro-Goldwyn-Mayer said through their spokesman Jeff Pryor that they are delaying huge projects like "The Hobbit" and future "James Bond" pictures which could cost them up to $1 billion to produce. Pryor also added that the studio was under no pressure to seek the funding either.
With financing in place for the big studios, it may be several years before the existing credit conditions make an effect on the market. The industry operates on somewhat of a lag, the reason there is no problem at this time. Most deals take about a year to put into place, because of their complexity.
Credit markets are projected to be tight for some time, so we could see more troubled times for the industry in 2010 or 2011 rather than now.
Still, we live in such a fast-paced world, so it's almost impossible to know how this will work out. If the future is similar to the past, it could be tight in a few years from now for the industry.
» Will FED Rate Cuts Help Movie Industry? from BizofShowBiz
The rate cut by the FED of 50 basis points probably won't have much impact on the movie industry, as most of their financing comes from private equity deals.Another reason is the studios have their financing in place for the... [Read More]
Tracked on: September 18, 2007 3:23 PM | Permalink to Trackback