Film industries around the world are getting a boost from an influx of pic funding:
The main reason for the upturn in fortunes lies in the hands of a few wealthy private individuals. Chief among these: Saudi prince and billionaire Al-Waleed Bin Talal, whose Rotana film production arm last year accounted for nearly 50% of the Arab film market.
The Egyptian film industry, traditionally the powerhouse of the Arab world but long in decline, is also receiving a boost from the arrival of Good News Group. The multi-media company, owned by Emad Adeeb, is using private funds to create a one-stop-shop for all platforms: Film production, a theater chain in Egypt, the Mideast license for Virgin retail shops, and its own magazines and radio channels to promote its pix.
— Ali Jaafar
RB Cinema I Funcine, a new $6.5 million Brazilian fund providing film gap finance and P&A, unveiled its first three film investments, including Carlos Diegues’ “The Greatest Love of All.” A second fund is in the works, says fund manager Thierry Perrone.
RB Cinema’s stockholders include risk capital firm Rio Bravo; Aracruz Celulose, Brazil’s biggest paper manufacturer; and Brazil’s state-owned bank BNDES.
Meanwhile, Dynamo Capital taps private equity for Colombian pic production.
Governments have initiated multiple mechanisms to mitigate private risk, upping state subsidies (Argentina), creating tax incentives (Brazil, Puerto Rico, and more recently, Colombia and Mexico) or matching private with public coin.
While private equity will get more films made, overseas distribution is still crucial. “If I’d tried to create a fund on my own, it would have been impossible. I needed an important partner in the U.S. taking care of distribution,” says Eduardo Costantini Jr., whose Weinstein Co. partnership gives their combo a large edge over rivals.
— John Hopewell
With Russian pics such as “Night Watch,” “Day Watch,” “Turkish Gambit” and “9th Company” outshining U.S. blockbusters, the movie business has also become an attractive option for investors. “There’s a lot of money available in Russia and because the Russian market is so huge, Russian filmmakers have the luxury of not having to worry about getting money from abroad,” says “9th Company” producer Yelena Yatsura.
Hungarian-U.S. producer Andras Hamori used Hungarian private equity as well as state funding on his recent production “Opium.”
“There are now many private investors in Hungary, because they realized that movie making is like any other business where you can make money,” Hamori says. “Before movies were never considered a business. It was considered art.”
— Katja Hofmann
In Japan, movies have long been financed by combos of local distribs, video labels, ad agencies and others, usually on a film-by-film basis. The last three years has seen emergence of a half-dozen funds managed by banks, erected around the production slates of the local majors. These provide the production companies with sustainable source of coin and spread the financiers’ risk across a portfolio of titles.
One or two Japanese funds are now open to local indie films or may have a specialization like digital or animated movies.
In South Korea, private equity funds played a big role in the growth of the movie industry since 2000. They have financed pictures from the independent sector and invested alongside the chaebol (South Korea’s particular brand of congloms) and in some cases have become production shingles.
With potentially bigger impact are Korean telcos, such as KTHand SK Telecom. Both are hungry for local content as they reinvent themselves as digital entertainment congloms and go head to head in launching mobile TV.
Giant ad agencies Dentsu and Hakuhodo have become regular investors in local Japanese and other Asian pictures. Interest has little to do with anything so obvious or clumsy as product placement, and is so long term that it appears almost altruistic.
From within China, former textiles mogul David Dong has launched Meridian Pictures. The company aims to build a virtual studio and sign half a dozen of greater China’s top helmers, starting with Hong Kong’s Johnnie To, to longterm contracts. Early hires for an international sales arm suggest that Meridian also sees its income coming from places further afield than China
— Patrick Frater