Almost since its inception, the film industry has managed to be counter cyclical in relation to the economy. Today, however, widespread economic problems are reflected clearly in the current state of film finance.

This situation — and when and how it may end — will be the main topic of discussion at the Film Finance Forum East, which kicks off today in New York.

“We in the film industry tend to think of ourselves as a world apart,” says Stephen Scharf of O’Melveny & Myers. “Today, on the production side, we see a direct reflection of the world economy even if, given the increase in box office revenue, the moviegoing side of the industry has not really been affected.”

With less liquidity, problems at some of the banks and troubles in the capital markets, the availability of investment funds has taken a serious hit.

“There are fewer top-level investors than there have been for a long time,” explains David Shaheen, head of JPMorgan Chase’s Entertainment Group. “New entrants have a strong appetite for well-structured deals with the top players. But they are generally plain vanilla in terms of the type of financing that is involved. It’s back to the basics.”

Although financing has far from dried up, the megadeals of previous times look to be things of the past.

Says Premila Hoon, founder and managing director of Entertainment Capital Advisors and former head of film financing at Societe Generale: “We closed big-ticket deals at SG, ranging from $200 million to $1 billion. We led and underwrote many of those deals. Apart from JPMorgan, all the big banks closed their media divisions in 2008 — and a whole generation of senior bankers in the space has vanished. It’s pretty shocking. Given the continuing lack of liquidity in the market, I don’t see those deals happening again in the near future.”

So, what does the future hold? Panel members are expected to go into detail during the two-day confab, but some gave early indications of what they expect.

Players in the world’s emerging economies are sniffing around the film business for various reasons. “There may be strategic reasons for, say, a foreign media company to invest in the film industry as a means of establishing itself further in the industry,” Scharf says.

The Middle East has also proven itself a source of funds, but it is far from blossoming as the hoped-for go-to region for film finance.

“There are always conversations going on with global strategic investors … but usually nothing comes out of it,” says Shaheen. “But when it does, it’s a major, smart, well-structured arrangement. For the most part, it is smart investors with well-defined goals and objectives, not dumb money.”

Hoon sees the region as still maturing in terms of film finance. “There’s a lot of money,” she admits, “but they like to acquire trophy assets. I haven’t figured out a strategy for bringing them in, yet.”

One thing to expect in the future is an increase in M&A activity.

“From my very narrow point of view,” Hoon says, “I am surprised at the level of strategic interest in smaller companies and the pace of consolidation. Reliance’s acquisition of IM Global is a good example. I think the bigger cash-rich companies are looking to acquire small nimble companies that can adjust to the changing landscape in terms of the ways films are distributed and consumed.”

The Salter Group’s Patrick Russo concurs with Hoon. “There will be more M&A activity in the future,” he says, “and there will be a reshaping of some companies. Some companies currently have unnatural owners that have come into existence through things like bankruptcy.”

The film industry has not been affected by the global economy nearly as much as some other industries, but there is one thing that it must do if it is to continue to attract serious investors. Says Russo, “There are fewer films being released, so there is some improvement on the cost side (which encourages investment). But if you don’t make good movies, none of that matters.”