Paramount forced to suspend $450m financing

[RamboLiberal]

Source: Financial Times

The credit crunch has hit home in Hollywood after Paramount Pictures, which has released a string of hit movies this year, was forced to suspend plans for a $450m film financing.

The studio has been working with Deutsche Bank on financing that would have provided funds for up to 30 films, including possible blockbusters such as the sequel to Transformers and a new version of Star Trek.

However, the bank was unable to close the financing because of a market-wide lack of enthusiasm for the deal’s senior debt component. Deutsche has subsequently decided to close its film finance unit and concentrate on other areas.

A person familiar with the negotiations said Paramount had walked away from the agreement because the terms had become too onerous. ”The terms had become unattractive compared with alternative sources of financing available to Paramount,” he said.

Although another bank may yet step in and rescue the package Paramount is likely to have to put the financing on ice until credit markets stabilise. Liquidity has dried up and although film slate deals can generate lucrative returns, potential lenders are steering clear of asset classes that are not triple-A rated



Read more: http://www.ft.com/cms/s/0/4b3eea5c-51f9-11dd-a97c-000077b07658.html?nclick_check=1

[Ilsa]

1. Rats. A new Star Trek would have been so much fun, too.

We don't get to go to many movies, but we always enjoyed ST.

Money is tight for the entertainment business now? The economy is worse than I thought.

[kestrel91316]

6. I met DeForrest Kelly a few times. He was a client where I worked in the mid-80s.

Watching Star Trek is way more cool when you actually know the people in it!

[johnfunk]

9. A new Star Trek movie IS on the way. Already cast, JJ Abrams directing

• Rumored to be a compete reboot and rethinking of the original franchise
• Set a few months before the original series began
• Some of the iconic characters reimagined (from a poster to TrekSubspace message board: "... picture Kirk as a womanizing, party boy screw-up a la George Bush Jr. or John McCain, about to be shown the door by Starfleet - until a catastrophe strikes and he is the only officer able to respond.").
• Christopher Pike will be played by Bruce Greenwood, Jim Kirk by Chris Pine, Amanda Grayson by Winona Ryder and Spock by Zachary Quinto.
• Release slated for Summer 2009.

[Pale Blue Dot]

2. Wow. And Paramount has had a HUGE summer.

with Indiana Jones 4, Iron Man and Kung Fu Panda, they have been the most successful studio this summer - by far.

This is just another really, really bad sign that's going to be ignored or poo-poo'd by anyone who doesn't already believe that the economy is in horrible shape.

On edit: It's like banks are betting that we will no longer be able to afford to go to the movies - worldwide.

[abelenkpe]

10. movies take out huge loans to get financing up front

Studios provide distribution and marketing. So even though Iron Man made a bunch of money, that money isn't going to go towards making Transformers. I have been lucky enough to work on big budget special effects movies and have been very worried about the credit crunch. Studios will still make movies, but I believe they may move towards making films that don't rely on expensive effects or shooting in exotic locations. During the depression movies were not exactly extravagant. Most of them were shot on sound stages here in LA. Something like 300 is doable, but Transformers is going to need a huge pile of money. Ofcourse, I think Transformers would be a good investment since it did do well at the box office, so who knows? I hope they keep making movies that rely on lots of CG animation, but that's just because I want to keep feeding my kids.

[DesEtoiles]

11. Lenders are going to keep that money hidden in their mattresses for now

[madrchsod]

3. Deutsche Bank got hit hard by the worthless mortgages they bought.

where i am at that bank and wells fargo have the most houses up for sale....

[Doctor Cynic]

4. At least there won't be so many annoying trekkies. n/t

[Make7]

5. Do I see a film finance window at the Federal Reserve in the near future? ( n/t )

j/k

[Odious justice]

7. Star Trek is already financed and done for the most part.

JJ abrams is running with this one. And Transformers is going to be ok. Call it a hunch. This speaks ill of the bank foremost.

http://trekmovie.com/2008/07/14/paramount-finance-deal-falls-through-no-affect-on-trek/

[DarthDem]

8. Just Sensationalism

The story originated with Drudge, which tells you all you need to know. This kind of risk maneuvering happens with film studios all the time.

[Tindalos]

12. Guess the usual big-budget SFX extraveganzas are off the table.

They might have to start relying on things like plot and character development to carry the story :eyes:

[girl gone mad]

13. There's still a lot of room for budgets to be reined in.

First and foremost, I think above the line salaries will take a hit. Endless rows of trailers might become a thing of the past. The business is much tougher than it was ten years ago. There's a lot more competition, including video games and infinite hours of free stuff on the web. Hollywood glamor doesn't even sell anymore, people want dirt.