Digital Domain, Sound One reveal predations of 'vampire squids'
The attackers fall on us in our sleep. Their fangs pierce our throats. They drain our blood, and what’s worse, they make us their thralls. We try to resist but they are too strong.
A pitch for a new horror movie? Sorry, no. I’m talking about the finance guys.
Matt Taibbi coined the phrase “vampire squid” to describe the predations of investment bank Goldman Sachs. In showbiz, we’re under attack from a school of vampire squids, ruthless and insatiable, large and small. We can see their bloody handprints on the vfx and post biz, but they’ve crept into the entire business.
This must end.
Not even the finance guys are immune from attack. These bloodsuckers coldly devour each other if we small fry prove too meager a meal.
Let’s take the case of Digital Domain, which just dodged oblivion when Beijing Galloping Horse and India-based Reliance MediaWorks stepped in to buy its vfx business out of bankruptcy. Other branches of the company remain shuttered, their employees jobless, even after the sale.
Former CEO John Textor, who led the company through the grandiose expansion that ended in disaster, is a former investment banker, a finance guy through and through, and he applied a finance guy’s political and financial legerdemain to Digital Domain. Subsidies were handed to DD without the required vetting or without hitting required employment targets. Today Textor faces lawsuits charging securities fraud, and a political scandal is just beginning to unfold in Florida.
But Textor’s defense will be that DD fell victim to predatory lenders. He argues creditors forced DD into an unnecessary bankruptcy that enriched them at the expense of the company, and that he could have sold DD to the same buyers without a bankruptcy. In a recent conversation with me, Galloping Horse vice chairman and managing director Ivy Zhong confirmed her company had reached such an agreement, but to complete it they were required to transfer funds within 24 hours, which was impossible. So DD went into bankruptcy and hundreds lost their jobs overnight.
It’s a squid-eat-squid world, I guess.
On Sept. 21 came the news that a Florida investment firm had bought the CSS family of sound companies from Discovery Communications. A few days later, historic Brill Building sound company Sound One was shut down “temporarily.” The release called it a “short-term” layoff “while the management team considers a variety of strategic options.”
In a decade of covering this space, I’ve seen several private equity firms buy into post and vfx, all saying the right things about why they wanted to be in that business. John Textor’s firm was a private equity fund. I can remember a few disasters, like Pacific Title and DD, but I can’t think of any of those deals that ended well. Post is a manufacturing business. In my experience, bad things happen when the finance guys get hold of manufacturing. They don’t want to make anything but money.
Look at the boardrooms, too. More than once I’ve heard how this financier or that production company has designed a structure that locks in revenues before the movie even begins production. The movies themselves become an obligation to be burned off, not quite industrial waste but inessential to the underlying financial instruments or deals.
Here’s a thought: Can it possibly be good for the movies when neither their quality nor their popularity are relevant to the financial interests of the people making them? But we lionize those guys because, well, because they have money I guess.
Oliver Stone had these guys pegged a quarter century ago in “Wall Street,” when Gordon Gekko said “I create nothing. I own. We make the rules, pal.”
This must end.
Showbiz is a manufacturing business, every bit as much as autos and refrigerators. Once, manufacturing and finance were much more in balance in the U.S., but finance gradually tightened its grip on the economy and the government until it became a stranglehold. Is that battle lost? Must we surrender and become thralls of the finance guys? I don’t think so. We can end this.
But only if we wake up, yank those infernal beasts off our throats and put them back in their cages.
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BITS & BYTES
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