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Tuesday, August 22, 2006

Will hedge funds get behind Tom Cruise?

The Wall Street Journal has a piece (subscription required) about the split between Paramount and Tom Cruise's production company, Cruise/Wagner Productions.


There's an interesting hedge fund element to the piece. Merissa Marr writes:


    ...Mr. Cruise's representatives...said that Mr. Cruise's production company had decided to set up an independent operation financed by two top hedge funds, which they declined to name. Paula Wagner, Mr. Cruise's partner in the company, said such an arrangement represented a new business model for top actors prominent enough to take advantage of the flood of money coming into Hollywood from Wall Street.

3 Comments:

  • There is a difference in getting a film "made" and getting it "distributed". MANY RICH PEOPLE "MAKE" MOVIES THAT NEVER GET "DISTRIBUTION" by the major distributors (Viacom/Paramount, News Corp/21st Century Fox, and GE/Universal Studios).

    ON MAKING A MOVIE
    I'm sure there will be some hedge fund out there that will want to "make" a movie with Tom Cruise. Absolutely. Tickets to the Oscars? Industry event after parties? And swapping investment stories with Tom himself will make hedge fund managers drool. But will the investors in those hedge funds enjoy such perks? Somehow, I doubt it and they will assume all the financial risk in the volatile film business. Unless these hedge funds take his film on in "small chunks", they won't be looking for a middle-ground anymore if they take on big risks of producing a $100mn film...the very definition of hedging which gave "hedge funds" their name. Case and point, in the WSJ article you'll see that the Cruise/Wagner folks are already looking to appease the hedge fund world by needing to have *two* hedge funds.

    ON DISTRIBUTING A MOVIE
    But distribution of a film is a different animal entirely - and a different artform. The Cruise/Wagner people should start hiring those people that Disney fired last month in LA to help them out. One must consider many factors -common folks might be surprised to know that one of the biggest determining factors in a film's success is the release data proximity to other films that are expected to be good or of a similar vain. This requires a high degree of closeness with *other* production companies - and the Paramount break, may signal to other studios that there is something seriously flawed in the Cruise/Wagner company. And release data proximity is just one of many other factors outside of the actual quality/star-power that the films holds. You can be an creative "outcast" in the entertainment/film industry and still be successful, but can you be an industry "outsider"? I don't think so. Even if they get a 10 tickets to the Oscars (one for each hedge fund manager they sign-on), they still may not get the distribution they need to produce a decent return on the investor's investment.

    My prediction: Cruise/Wagner quickly get signed-on to another film studio for distribution - best bets: Sony, Disney.

    Business as usual, folks.

    By Blogger Fontaine, at 12:10 PM  

  • There is a difference in getting a film "made" and getting it "distributed". MANY RICH PEOPLE "MAKE" MOVIES THAT NEVER GET "DISTRIBUTION" by the major distributors (Viacom/Paramount, News Corp/21st Century Fox, and GE/Universal Studios).

    ON MAKING A MOVIE
    I'm sure there will be some hedge fund out there that will want to "make" a movie with Tom Cruise. Absolutely. Tickets to the Oscars? Industry event after parties? And swapping investment stories with Tom himself will make hedge fund managers drool. But will the investors in those hedge funds enjoy such perks? Somehow, I doubt it and they will assume all the financial risk in the volatile film business. Unless these hedge funds take his film on in "small chunks", they won't be looking for a middle-ground anymore if they take on big risks of producing a $100mn film...the very definition of hedging which gave "hedge funds" their name. Case and point, in the WSJ article you'll see that the Cruise/Wagner folks are already looking to appease the hedge fund world by needing to have *two* hedge funds.

    ON DISTRIBUTING A MOVIE
    But distribution of a film is a different animal entirely - and a different artform. The Cruise/Wagner people should start hiring those people that Disney fired last month in LA to help them out. One must consider many factors -common folks might be surprised to know that one of the biggest determining factors in a film's success is the release data proximity to other films that are expected to be good or of a similar vain. This requires a high degree of closeness with *other* production companies - and the Paramount break, may signal to other studios that there is something seriously flawed in the Cruise/Wagner company. And release data proximity is just one of many other factors outside of the actual quality/star-power that the films holds. You can be an creative "outcast" in the entertainment/film industry and still be successful, but can you be an industry "outsider"? I don't think so. Even if they get a 10 tickets to the Oscars (one for each hedge fund manager they sign-on), they still may not get the distribution they need to produce a decent return on the investor's investment.

    My prediction: Cruise/Wagner quickly get signed-on to another film studio for distribution - best bets: Sony, Disney.

    Business as usual, folks.

    By Blogger Fontaine, at 12:10 PM  

  • By Blogger Lorraine, at 1:01 AM  

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