I’m not sure why I’m taking the time to write this column, because I’m increasingly convinced no one believes what they read in the paper.Here’s an example: Media pundits have been telling us insistently that box office is declining, costs are soaring and hence, savvy investors should ignore the traditional movie business and channel funds into the Internet. So if the smart money guys really buy that, how can you explain the fact that new capital is literally flooding into the movie business? In fact, there’s so much money around that some top studio executives acknowledge they don’t know what to do with it. “The worst reason to make a movie is when you feel you have to move the money,” says one production president. Yet, each week brings announcements of new funding entities under various labels. Warners has its Legendary group while Paramount has Melrose Investors and, most recently, Gun Hill, at both Sony and Universal. Some of the money stems from hedge funds, some of it arrives via the Deutsche Bank or Merrill Lynch. “In some cases, I can’t figure out where the money is coming from,” says one studio suit. “When you go to premiere parties, you see an empty table amid the festivities. That’s what we call ‘the investors’ table.’ ” All this should be great news to the corporate functionaries, who are delighted to lay off half the cost of mega-budget films like “Superman Returns” or of behind-schedule projects like Nancy Meyers’ “Holiday” (which is co-funded by Sony, Warners and random outside investors). But here are some possible negatives:
- Insiders worry that the inflow of capital will spur a glut of production.
- Whenever there’s so much money around, talent deals get crazy and budgets soar.
- Then there’s the biggest worry of all: What happens when the money stops?