Hollywood to Hedges: Hello Suckers!

Lloyd Grove of the Hollywood Reporter looks at the zillions of bucks flowing from Wall Street to film makers. He doesn't think it's necessarily a good thing for the industry, since it means that far too many movies are getting funded.

Although Hollywood's enjoying a tidal wave of production funding from Wall Street, it's not necessarily a good thing for the film industry. As crazy as that sounds, the fact is that the flood of private equity funding that studios and high profile producers are enjoying these days brings with it some hidden problems. On the face of it, the hundreds of millions of dollars that are going into production -- the total by now may actually be in the billions -- are a blessing because without them a lot of movies wouldn't be getting made.

Wall Street isn't stupid, so why would so many investment managers who've made so much money in other industries jump at the chance to risk hundreds of millions of dollars to make movies? The easy answer is that Hollywood has always had the allure that comes from being a glamorous business. Guys who have, for instance, made their fortunes in industrial waste or pork bellies or peddling fertilizer or selling farm equipment respond energetically when they can suddenly bankroll a piece of a new movie and know that they and their spouse (or somebody else's spouse) will be wined and dined at the film's premiere and get to rub shoulders with A List stars and directors.

And it's not just glamour. There's also greed. Wall Street reads the same box office reports that Hollywood does about movies grossing $1 billion or close to it in the global theatrical marketplace and about the riches from DVD sales even in today's so-called mature marketplace. At the end of the day, the Street believes the upside potential of investing in Hollywood is greater than just about anything else there is -- except, perhaps, drilling for oil!

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