“I left one group of bad actors for another group of bad actors,” former senator turned MPAA chairman and CEO Chris Dodd joked Monday at the Milken Global Conference, referring to his transition from public office to Hollywood.
He was part of the Future of Wall Street panel along with Richard Daly, CEO of Broadridge Financial Solutions; Bob Diamond, founder and CEO of Atlas Merchant Capital; Tom Milroy, CEO of BMO Capital Markets; and Ruth Porat, exec VP and CFO of Morgan Stanley.
While the focus remained largely on the financial services industry, there were obvious parallels to the health and current fiscal state of Hollywood, particularly in film financing. Topics ranged from regulation to the idea of companies being “too big to fail” to the development of IP in developing countries.
Some takeaways from the panel:
1. Foreign banks are bringing their capital back home
Diamond claims that the large U.S. banks are “far safer and sounder” than they have been in recent years, particularly in the post-financial crisis global economy. However, he also mentioned the current trend in Eurozone banks – looking to their respective countries and “bringing capital back home,” which means they are less likely to look for international capital distribution.
What this means for Hollywood: Slate deals and co-financing agreements regularly use banks for senior and sometimes junior debt within those deals. If European banks are looking to invest their capital in their respective home countries, there will be less of a willingness to invest in Hollywood, making bank money more difficult to come by.
2. Emerging countries lack financial services regulations
Russia, China, Brazil and India are “not establishing ground rules” within the financial services industry, according to Dodd. Those countries serve a “critical role” in the international banking community and without regulation “pose significant risks in the future.”
What this means for Hollywood: The so-called BRIC countries play a critical role in the global success of Hollywood. This year, China became the first international market in history to cross the $3 billion mark in ticket sales with revenue reaching $3.6 billion, up 27.5% over 2012, for example. When raising capital, several film financiers and producers have already spoken about the complexity of securing liquid international funds. If the financial services industry is lacking regulation, the transfer and infusion of foreign money will be even more difficult.
3. Technology is changing the game
Although this might seem a bit obvious, Porat admitted that not only is technology, in particular mobile technology, creating new business models, but it is in equal parts “both a threat and a responsibility.” Dodd tethered that idea to Hollywood by noting that people with four or five devices will go to the movie theater twice as often as those with fewer. “They love content and providing content for people (is the same) in financial services. It’s how they want it and where they want it” that’s most important to figure out. Most all the panelists agreed that mobile banking and cloud banking – sans brick and mortar spaces – is still a bit of an enigma, especially in developing countries.
What this means for Hollywood: The potential for different layers of foreign investment in Hollywood is endless — not just wealthy financiers looking specifically for film financing opportunities will have the accessibility to do so, but a whole new pool of potential investors could emerge as more facets of the financial services industry develop online services.