Drivers around the world are fretting over the zooming prices at the gas pump. But is it possible the higher prices are paying for movies?
It appears so. The past two weeks has seen a clutch of high-profile deals between financial execs from the Middle East with showbiz players from around the world.
The trend isn’t likely to stop anytime soon. With oil prices posting record highs — and regional instability and uncertainty over the U.S. dollar unlikely to end anytime soon — the Middle East, particularly the Gulf, is awash with deep-pocketed investors looking for international media companies to invest in.
The rise of the Mideast coin has come at an opportune time, with Wall Street and private equity funds drying up in the wake of the subprime fallout and the Asian film biz going through a downturn of its own.
First among the most recent deals was Dubai Intl. Capital’s acquisition of between 2% and 3% of Sony Corp.
DIC, an investment company owned by Dubai ruler Sheik Mohammed Al Maktoum, reputedly paid up to $1.5 billion for its Sony stake, which though undisclosed is “substantial,” according to a DIC statement.
Egyptian brokerage firm Borak Holding followed that by investing $550 million in U.S. shingle the Insomnia Media Group. That deal will see Insomnia, founded in 1994 by Bret Saxon and Jeff Bowler, retain majority ownership and use the coin to finance future film-related activities, including production, acquisitions of film libraries as well as talent and management firms.
The two firms are collaborating on a $70 million historical war epic about a 12th century Arab general, which they hope will go into production by next summer.
Other Insomnia/Borak projects include “Across the Hall,” starring Mike Vogel (“Cloverfield”), and a possible dip into animation. Borak Holding founder and chairman Ayman Kandeel originally set up an Arab comicbook company called AK Comics, based on superheroes derived from Islamic stories. Insomnia execs are exploring the possibilities of adapting his characters into a full-blown feature.
These recent deals follow a flurry of 2007 showbiz activity emanating out of the Middle East. In October Abu Dhabi inked a multibillion-dollar, multimedia deal with Warner Bros. that includes a $500 million film fund, $500 million vidgame fund and real-estate projects.
Viacom has forged a strategic partnership with the UAE-based Arab Media Group, which has seen the November launch of MTV Arabia and will be followed next year by an Arabic- language Nickelodeon channel.
MBC chairman and founder Saudi Sheik Waleed Al-Ibrahim has invested heavily in Mark Gill and Neil Sacker’s new production and finance shingle, the Film Dept., while rival Saudi maven Prince Waleed bin Talal will expand the film division of his multimedia titan Rotana into English-language pic production.
Universal and Paramount have made deals to develop Dubai theme parks. Canadian CCI Entertainment and Dubai-based Blink Studios announced a deal in October to produce “Tooterville,” among other projects. And Foresight’s Mark Damon is developing a sales and production shingle with potential coin for the venture coming from Saudi Prince Faisal bin Sultan.
“Things are going well in the Middle East and they’re looking at opportunities across the board,” Insomnia’s Saxon says. “The people who were thrilled to get $12 for a barrel of oil a few years ago are getting $98 a barrel now. There’s a lot of extra capital investment available to people in the region now.”
In previous years some Gulf investors saw film and TV as a social hobby, but the current crop is expecting sizeable returns on its coin. Mideast investors, boasting greater business savvy and financial clout, are more confident they won’t get taken for a ride by potential suitors. And as with so much Mideast business, the bottom line rules, but it is unlikely that any of the joint ventures will dabble in issues such as religion or politics.
“The Middle East is one of the areas which Hollywood hasn’t completely tapped yet in terms of potential,” the Film Dept.’s Gill says. “It’s one of the most interesting areas to work with right now.”