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Wall Street says 'CUT'!
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In a time where the white noise is only deafened by screams, Wall Street is questioning its ventures into the world of Glitz & Glamour. Turns out all that shines is not gold. Among economic concerns and a financial structure that seems to have more problems than Britney & Whitney combined many of the IBO Firms are pulling the plug on the lime light. Recently Merrill Lynch announced that it is disbanding its deals with related firms like Summit Entertainment and Paramount Pictures, as well as questioning relations with United Artists after the recent firing of UA CEO Paul Wagner.
Don't roll the credits on this story yet, like any business environment, trenches lead to consolidation, which in turn leads to opportunity. Goldman Sachs has swept in as a consultant to Metro-Goldwyn Mayer, parent company to United Artists. DreamWorks pairing with India's Reliance Entertainment and the recent stream of Middle East money also show the future of foreign hands wearing the 'Hollywood' glove as Investment Funds and Foreign Private Equity funnel money into the Entertainment Capital of the world.
While the Financing of Movies has always been a speculative trade some see the rewards of tax shelters, premier events, bragging rights, and the possibility of the next 'titanic' as a list that outweighs the likelihood of a less than solid return on their investment. But fronting the funds for the fantasy is only tolerated when economic forecasts are good. Weak economic expectations create monetary conservatism and a flight to security; leaving more speculative ventures holding their breath waiting for the flood waters to retreat.
While the lights on the Hollywood sign flicker they will be never be extinguished. As with many industries during a downturn this will lead to larger holdings as survival leads to consolidation. This will benefit the craft as less funding creates the opportunity for Indy-films with smaller budgets but more substance to make their way onto the scene. This will lead to a new type of financial movie funding, giving rise to a more solid talent rather than the pop enthralled conveyor belt type films that the mainstream has become accustomed to.
