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Business Line Hollywood looks east for funds Sunday, 21 September , 2008, 10:32
Mumbai: The deal between the Reliance ADAG group and Steven Spielberg's DreamWorks SKG is just another instance of fund-starved Hollywood looking eastward.
Hollywood's production houses now find themselves in the midst of situations similar to the ones they churn out in their own films on Wall Street. The raging financial crisis overseas is pinching them as well.
According to several foreign media reports, the film financing is speedily drying up for Hollywood's big names. After this week's collapse of Lehman Brothers and buy out of Merrill Lynch by Bank of America, a number of production houses are in a fix, say reports. So much so that certain production houses are turning to Asia for garnering funds.
Reuters quoted US's film-finance attorney, John Burke, on Monday: "A financial market that's in a meltdown is not good for the industry in so many ways." The report also points out that some studios and new ventures took funds from institutions such as Merrill Lynch and "have locked in money and interest rates for the near-term".
Giving a specific example, the report points out that MGM's United Artists division could be in for some trouble, "in the most dramatic scenario that could lead to the facility being pulled". The company is believed to have raised $500 million for a production facility with Merrill, says the report.
Merrill Lynch & Co reduced film financing in May, when Michael Blum, who led divisions that packaged mortgage bonds and raised money for Hollywood films, left the company, says a Bloomberg report.
Other film companies, such as The Weinstein Company, Walt Disney Company and Paramount, are also believed to be looking at alternative plans (Asian sources of funding or picture-by-picture funds) once their existing fund agreements come to a close.
Gulf calling
Hollywood is seeking funds from Gulf destinations, apart from Asia. According to a Bloomberg report, Abu Dhabi plans to spend $1 billion over five years to finance Hollywood and international films. Abu Dhabi Media Co. formed Imagenation Abu Dhabi to work with producers to make as many as eight films a year, says the report. "Abu Dhabi is stepping in as other sources of movie funding dry up amid the credit crunch".
The Abu Dhabi company is believed to be working closely with Time Warner Inc. and MGM Mirage to build theme parks, says the report.
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Among the Asian tie-ups and joint ventures is Walt Disney's recent tie-up with Yash Raj Films to produce animated features for Indian audiences and to release one animated movie a year.
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