The conventional wisdom that Hollywood never suffers in a recession may prove false this time.
Even if consumers flock to movie theaters, production appears likely to take a hit – especially for independents. Like elsewhere in the financial world, banks and other traditional funders of movie and TV production are cutting back on their investments until they see how the economy fares.
“Production will fall significantly,” said D. Jeffrey Andrick, Managing Director of Continental Entertainment Capital, which arranged co-financing in September for independent film
Indie "Give 'Em Hell Malone" was lucky it got funded in September, not October
starring Thomas Jane and Ving Rhimes. “Deals that looked like they might come together a certain way, that relied on a certain equity source, have been paralyzed.”
Hedge funds, a popular source of film financing recently, are also struggling; and foreign distributors – which often help finance films by pre-committing to it – are also sitting on the sidelines, Andrick said.
Big studios aren’t likely to dramatically cut films they’ve already committed to. But look for a lot more caution if the recession deepens. And indie filmmakers, whose financing prospects are shaky at the best of times, are going to have more trouble getting films made.
So even if more consumers chill at the movies, they’ll likely have a lot less product to choose from.
Posted under Michael's Blog
This post was written by Michael Stroud on October 29, 2008
