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In the last three years, the film industry has witnessed a slow but steady pull-back from large investors such as hedge funds and investment banks. The large scale global economic meltdown is the primary reason but not insignificant is also the reason that the investors have not liked the way the slate deals have been structured by the studios. This might result in a fundamental shift in strategy the large investors adopt in their future dealing with producers and studios. The painful slowdown in the capital inflow has forced Hollywood also to re-evaluate its own attitude towards financiers.  

Two veteran Hollywood producers, Arnon Milchan and Terry Semel, are planning to launch a $1 billion film fund that would be run differently than funds in the past. They would not only be hands-on executive producers of the funded films but also pick and choose projects from different studios. What is going to add credibility to their effort is the fact that they both are putting up over $200 million each of their own money. Ares Capital is another group, among several others, that is mulling the launch of a similar large film fund in the $1 billion range.

“They think that with there being no slate financings around and with their specifice pedigrees and reputations in the business, it’s a great time for them to do this,” said a financial community insider familiar with the duo’s plan. “All sorts of people are saying they don’t want to invest in Hollywood anymore. So Arnon and Terry are saying to the studios, ‘There is nobody better than us to do this for you; the fund will be run by the most experienced professionals this time.’ “                            

The plan would see Milchan and Semel each contribute $200 million or more to set up the fund, while turning to banks and other lenders for additional capital.                    

 The Ares fund also is expected to top $1 billion when launched later this year.

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