Tom Pollock and Ivan Reitman are in the money.
Their Montecito Picture Co. has raised $200 million to co-finance 10 films — mostly comedies — over the next five years.
The backing venture, named Cold Spring Pictures, was arranged through a combination of equity provided by Merrill Lynch, hedge funds and bank debt secured by Merrill Lynch and the French bank Societe General. Company will have a first-look arrangement to co-finance movies made by Montecito, which itself has a first-look distrib deal with DreamWorks.
CSP can invest in Montecito projects that get shopped to other studios if DreamWorks passes; other studios can access the CSP funding if they bring pics to Montecito to produce.
Deal is a clear indication that DreamWorks intends to be more active as a production entity than some had anticipated. Funding comes just as DreamWorks extends Montecito’s first-look deal for another five years.
While the allure of the pact lies in the co-financing of moderately budgeted comedies, the first project under the deal will be the D.J. Caruso-directed thriller “Disturbia.” That pic, which just completed production at Montecito, will be distributed by DreamWorks through Paramount next year.
Deal is a new wrinkle in the independent financing schemes that are becoming more commonplace as risk-averse studios welcome entrepreneurs and hedge funds as financing partners. Most of these investments involve spreading money over studio film slates.
“Wall Street has never invested before in a slate of films tied to a single set of producers,” said Pollock, who put the deal together more than a year ago with Michael Blum, Merrill Lynch’s head of global structured finance and investments, and Merrill Lynch managing director Eric Allini and director Bob Stanley.
“The kinds of movies we make are in an exceptionally sweet spot in the studio system; we tend to make comedies at a price,” Pollock said. “When they work, like with ‘Old School’ and ‘Road Trip,’ they make a lot of money. When they don’t, like ‘Eurotrip,’ they don’t lose much. From a Wall Street standpoint, that’s a good risk.”
Though Reitman’s most recent film, “My Super Ex-Girlfriend,” was one of the few comedy misfires this summer (he was a director for hire on the New Regency/Fox comedy), his track record as a director and/or producer includes “Animal House,” “Twins,” “Kindergarten Cop,” “Ghostbusters” and “Dave.” For years, Pollock was chairman of the Universal Motion Pictures Group and vice chairman of MCA and before that one of Hollywood’s most prominent attorneys.
Reitman and Pollock formed Montecito in 1988. With the new company, Pollock and a Merrill Lynch representative effectively will decide which films Cold Spring co-finances.
A sequel to “Old School” is being developed and would appear to be a co-financier’s dream. Director Todd Phillips is writing a script with collaborator Scot Armstrong, and if he gets Will Ferrell, Vince Vaughn and Luke Wilson to return, the budget will likely fall beyond CSP’s cap. The financing entity will still get first look and will likely invest its per-pic limit to secure a partial stake.
Deal is the latest showbiz finance move by Merrill Lynch, which spearheaded, with investor Suhail Rizvi, the recapitalization by ICM and its recent acquisition of the talent agency Broder Webb Chervin Silbermann. Merrill Lynch also arranged the Melrose Fund, a multipic slate deal at Paramount that disbursed $230 million in production financing over 26 films in two years. That amounted to 20% of Par’s production budget over that term and ended with “Mission: Impossible 2.” Merrill Lynch also arranged $525 million in production financing for Marvel Entertainment.