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Hedging their bets

Funds finicky about producing partners

With billions of dollars worth of hedge fund and private equity money pouring into film financing in recent years, there’s a sense that all a producer needs to do to put together a film fund is hold out a couple of scripts and a tin cup and wait for the Wall Street lucre.

But for every movie producer who has landed coin — say, Ted Field‘s Radar Pictures or Tom Pollock and Ivan Reitman‘s Montecito Pictures — there are five more still out looking for money.

It seems nearly every high-level studio exec who’s ankled over the last few years has tried to raise his own coin. But few have pulled it off. Bill Mechanic was in talks with potential investors since stepping down as head of Fox Filmed Entertainment in 2000, but he has yet to seal a deal.

More recent studio departees, like Rob Friedman, formerly of Paramount, and former Warner Independent Pictures head Mark Gill have been looking for financing since they left their day jobs.

So too was former Walt Disney production chief Nina Jacobson, before she took a more traditional producer deal at DreamWorks.

And there are plenty more.

The wave of private equity money into Hollywood has been driven by the ability to invest in an entire slate of studio pictures, which reduces the risks of banking on a single bomb. Investors look for a track record of produced movies from which to judge future returns.

But, simply put, few producers come close to matching the output of a studio. Up to now, equity firms have been reluctant to invest in independent producers who don’t have some kind of guarantee that a studio will distribute their movies.

Field’s Radar may have redefined the types of deals that private equity investors are willing to do. Field is not exclusive to any studio; he is a true independent producer. Private equity financiers and high-net-worth individuals will invest in 25 films of about $20 million each over the next five years. To reduce risk, there’s speculation that Radar will sell individual projects in foreign territories and then pact with a studio for domestic distribution.

“My view is that there is sufficient continuing investor interest in independent producer deals that we will see a number of deals get done in the next three months,” says attorney P. John Burke of Akin Gump, who specializes in film financing.

In other words, choose your cup wisely.

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