Some investors are not waiting for the final reckoning. Late last year, Deutsche Bank offered to sell stakes in Gun Hill Road II at a discount of as much as 30%, according to people who were approached by the bank's salespeople.
Investment bankers say the studios have started to see the need to appease investors in slate deals. They are beginning to sweeten the terms, sometimes under the threat that investors will demand to audit their spending or sue.
For The Record
Los Angeles Times Wednesday, March 19, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 63 words Type of Material: Correction
Studio financing: An article in Section A on Feb. 16 about hedge-fund financing of Hollywood movies said studio projections for films in an investment pool known as Gun Hill Road I indicated that "Doom," "The Holiday" and "Stranger Than Fiction" might lose a combined $100 million over seven to 10 years. The projected losses for those three films are actually about $84 million.
For The Record
Los Angeles Times Friday, March 21, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 45 words Type of Material: Correction
Studio financing: An article in Section A on Feb. 16 about hedge-fund financing of Hollywood movies incorrectly identified Och-Ziff Capital Management as an investor in a slate of films known as Gun Hill Road I. Och-Ziff was not an investor in Gun Hill Road I.
"There are a variety of strategies to improve investor returns by engaging the studios," said Stephen Prough, founder of Salem Partners, a Los Angeles investment bank. "You can get their attention."
Future deals are likely to more closely resemble Dune Capital Management's arrangement with 20th Century Fox. The deal provides production capital for all Fox films rather than a limited selection. That helps ensure that the hedge fund will share in the studio's hits as well as its failures.
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michael.hiltzik@latimes.com
josh.friedman@latimes.com
