Studio drops finance plan
Paramount Pictures has ditched efforts to raise $400 million to $450 million in film financing through Deutsche Bank that would have helped bankroll its movies over the next two years, the studio said Monday.
Deutsche, which has been a leader in film financing, sought terms that Paramount found too steep.
“The deal terms had evolved to a point where they were unattractive when compared to alternative sources of financing,” said Patricia Rockenwagner, a spokeswoman for the studio.
Investors, stung by disappointing returns from some Hollywood film slates in recent years, are becoming less enamored with risking their money on such a volatile business.
Over the last four years, an estimated $14 billion of film financing has poured into Hollywood’s movie coffers from private equity, hedge funds and other outside investors.
Banks are reeling from the current economic downturn and have been retreating from film financing endeavors -- leaving Hollywood studios scrambling for alternative sources of capital to bankroll their movie slates.
Deutsche recently parted ways with its film financing group, a team headed by star banker Laura Fazio. Deutsche had poached Fazio a year ago from Dresdner Kleinwort, where she had helped broker a number of high-profile financing deals including two between 20th Century Fox and Dune Capital Management, one with Paramount and a $1-billion deal between Warner Bros. and Legendary Pictures.
Ted Meyer, a spokesman for Deutsche, said Monday, “I can confirm that they’re no longer with the bank.”
Under the financing package that was being discussed with Deutsche the bank would have financed 25% of the budget of each movie with an investment cap of $30 million.
Meanwhile, Paramount does not plan to seek another overall slate deal through a bank but instead will continue to co-finance its movies on a picture-by-picture basis with partners such as Spyglass Entertainment and Level 1 Entertainment, a person familiar with Paramount’s strategy said. Level 1 is an investor in Paramount’s new “Star Trek” movie set for release next year.
Over the last year, Paramount has made deals with partners such as Spyglass on the recent flop “The Love Guru” and next year’s “G.I. Joe” and with Universal Pictures and Participant Media on this fall’s release “The Soloist.”
The loss of the Deutsche deal “has no impact on our short- or long-term production plans at the studio,” said Paramount Vice Chairman Rob Moore.