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Posts Tagged ‘Hedge Fund’


The hedge fund industry is one of many mega capital financing alternatives that enable the commercial and underground film and entertainment industry. Hedge funds are a somewhat special financing arm such that they often create additional investment opportunities for entities similar to multinational & investment banks and private equity firms. Private investors are interested to put money into the next potential Hollywood blockbuster and hedge funds provide that opportunity. Funds then propose to finance a potential movie or a pool of movies in a revenue sharing agreement with the necessary partners. Since the bursting of the tech bubble in 2001 and the real estate bubble in 2004, add to that the recent global economic and financial crisis, Hollywood has to rely on "maverick" forms of investment. The "supply chain" revenue stream created by a well received, expensive/non expensive blockbuster or a risk pool of multiple movies can be considerable. Public expenditure in dollars for entertainment is resilient in economic downturns. The industry is akin to that of public utilities, beer & liquor, and bar & restaurant. Many investment companies are seeking returns in this area and hedge funds are a strong source for lending to the entertainment industry. "The pis is bigger in general. You have the growth of the international marketplace, (and) you have home video and markets that were not available years ago." Thomas Tull, Executive - Legendary Pictures "The emergence of the hedge fund, ...


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 ...