Producers Team Up With Fund Managers and Leave Studios With Distribution In A Win Win Win Businesss Model

Over the weekend, the NY Times ran an article covering the growing trend in Film Producers soliciting financing through Hedge Funds rather than Studios.  Apparently this is a business model which suits all parties, but is shifting the balance of power in content direction. Producers make lots more cash and have more creative control. Hedge funds get increased control and choice of projects they want to finance. Studios lose creative control and some revenue channels, but due to a shifting market they can only afford to make a certain amount of films but their distribution network demands higher volume, so this model fits their needs if not desires.

This style of movie financing has been driven by necessity. Studios have been forced to trim their slates because of higher costs, but they still need a steady stream of movies to distribute. In turn, producers need financing, because the studios are backing fewer films. And cash-rich financial institutions are looking for places to invest, hoping to earn double-digit returns while limiting their exposure to the fluctuations of the stock market.