As stock market volatility continues, roiled by unpredictable economic news, some are looking to Hollywood — the land where, between 2004 and 2008, money often went to die — for an alternative investment opportunity.
Though it may be too soon to tell whether it will prove a lasting trend, private investors, who deserted the movie business after the financial collapse in 2008, are slowly creeping back in.
“It has been like being in a very dark cave,” said Clark Hallren, managing partner of media-consulting firm Clear Scope Partners. “But we are beginning to see some rays of light.”
This month, investment bank Sonenshine Partners helped hedge fund Grosvenor Park, the company that produced “The Hurt Locker” and “P.S. I Love You,” raise $100 million in financing to invest in films. Last week, Canal +, the French pay-TV giant, unveiled a slate financing deal worth $204 million over the next three years. In early August, Los Angeles-based investment firm Hemisphere Capital Management raised over $200 million for a revolving equity and debt fund to co-finance studio movies.
Investment is picking up in part because film-industry performance has historically had little correlation to the stock market — a plus for investors facing today’s bipolar stock market. More importantly, terms for investment in Tinseltown are more favorable now than ever before, say bankers.
In the go-go days several years ago, the abundance of Wall Street money caused distributors to raise fees, and allowed studios the luxury of keeping the lowest-risk films, so-called tent-pole projects, for themselves.
And the giddy investors who once threw cash at Hollywood nearly lost their shirts in 2008, especially as the DVD market sank by over 20 percent.
Now after several years of drought, “the studios are open to treating investors favorably, and the tables are turning,” Hallren said.
“Where once there were 35 lenders in the space, today there are only seven or eight,” said Don Starr, founder of Grosvenor Park. “Now is an optimal time to re-enter the film lending space.”
That said, no one sees a return to the boom days anytime soon, as caution still prevails.
“I do think that there are signs of change,” said Marshall Sonenshine, chairman of Sonenshine Partners. “Longer term, there will continue to be a sectoral recovery.”
Though it may be too soon to tell whether it will prove a lasting trend, private investors, who deserted the movie business after the financial collapse in 2008, are slowly creeping back in.
“It has been like being in a very dark cave,” said Clark Hallren, managing partner of media-consulting firm Clear Scope Partners. “But we are beginning to see some rays of light.”
This month, investment bank Sonenshine Partners helped hedge fund Grosvenor Park, the company that produced “The Hurt Locker” and “P.S. I Love You,” raise $100 million in financing to invest in films. Last week, Canal +, the French pay-TV giant, unveiled a slate financing deal worth $204 million over the next three years. In early August, Los Angeles-based investment firm Hemisphere Capital Management raised over $200 million for a revolving equity and debt fund to co-finance studio movies.
Investment is picking up in part because film-industry performance has historically had little correlation to the stock market — a plus for investors facing today’s bipolar stock market. More importantly, terms for investment in Tinseltown are more favorable now than ever before, say bankers.
In the go-go days several years ago, the abundance of Wall Street money caused distributors to raise fees, and allowed studios the luxury of keeping the lowest-risk films, so-called tent-pole projects, for themselves.
And the giddy investors who once threw cash at Hollywood nearly lost their shirts in 2008, especially as the DVD market sank by over 20 percent.
Now after several years of drought, “the studios are open to treating investors favorably, and the tables are turning,” Hallren said.
“Where once there were 35 lenders in the space, today there are only seven or eight,” said Don Starr, founder of Grosvenor Park. “Now is an optimal time to re-enter the film lending space.”
That said, no one sees a return to the boom days anytime soon, as caution still prevails.
“I do think that there are signs of change,” said Marshall Sonenshine, chairman of Sonenshine Partners. “Longer term, there will continue to be a sectoral recovery.”
