7/29/11

Hollywood movies have long been mentioned as one of only two recession proof industries (SB for the first monkey to name the other). Organized, non-industry investing in movies, however, has not proven the least bit easy. Anyone who recalls the shit fit thrown by Hollywood at the notion of a movie ticket sales futures market a while back, knows what I mean.

This golden goose is hard for investors to give up on, however. The latest in a long line of takers is the Chatsworth Group.

Chatsworth MD Rich Furlin is the mind behind the project which is described as:

The ARA-MovieArb Equity Strategy is a private equity vehicle targeting Hollywood films. The goal is to raise $275 million which will be invested in 10-film slates, with an equity limit of $7.5 million per movie. In choosing films in which to invest, MovieArb will be aided by its sister company, Epagogix, which specializes in analyzing the box-office potential of movie scripts (and takes its name from Aristotle's discussion of epagogic, or inductive learning).

I know more than a few of you guys have California dreams in the back of your mind, so how would you approach movie investing? Would your analysis differ from the cut/paste DCFing of bullpens gone mild? When you think about film and the high potential ROI involved, why do you think more financial industry players have not gone after this potentially lucrative investment space?

Or am I mistaken and many would have...but the wide moats of Hollywood have kept the Barbarians at the Gate?

Comments (34)

7/29/11
7/29/11

Alcohol is the other recession-proof industry.

I honestly don't think this movie futures thing is going to work out. People would only want to bet on sure things, i.e., sequels to very successful movies as a "guaranteed" take. Movie audiences are so unpredictable; how would the contracts be priced?

Metal. Music. Life. www.headofmetal.com

7/29/11
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7/29/11

Candy bars. like snicker and mars bars

7/29/11

I'm going with restaurants and bars too: My take actually INCREASED while bartending during the worst of the recession. When things are good, people want to celebrate - and when things are bad, they want to drown it out in alcohol.

Get busy living

7/29/11
7/29/11

Take a look at what Ryan Kavanaugh has done with Relativity Media. He has taken over this space and made a big name for himself the past few years. FYI, Relativity was involved in the movie 300 and a bunch of other notables.

Kavanaugh, in case you didn't know, started his own VC company at the age of 22 and is a very smart guy.

7/29/11
7/29/11

Forum blogger?

- Bulls make money. Bears make money. Pigs get slaughtered.
- The harder you work, the luckier you become.
- I believe in the "Golden Rule": the man with the gold rules.

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In reply to krazyk
7/29/11
krazyk:

Take a look at what Ryan Kavanaugh has done with Relativity Media. He has taken over this space and made a big name for himself the past few years. FYI, Relativity was involved in the movie 300 and a bunch of other notables.

Kavanaugh, in case you didn't know, started his own VC company at the age of 22 and is a very smart guy.

Seconded, Relativity Media is awesome, was going to mention them.

Also, best Hollywood-related article I've read in a long time, maybe ever:
http://www.grantland.com/story?id=6716942&view=full

Consultant to a Fortune 50 Company

7/29/11
7/29/11

government job, the other recession proof industry

7/29/11

Gambling.

I have to return some video tapes.

7/29/11

Owning Waterways and rights to consume/package/sell certain points of fresh water. Atleast that's where I am putting my money when I make it big on Wall... oh wait.

"Now watch this drive." -W.

7/29/11

Major fail by the OP in asking a question in the post that's totally unrelated to the post's content...

Consultant to a Fortune 50 Company

In reply to alexpasch
7/29/11
alexpasch:

Major fail by the OP in asking a question in the post that's totally unrelated to the post's content...

party pooper. booooo

Get busy living

7/29/11

this may help...

"Stocks markets go up and down, but no matter what the economy is doing, people worldwide continue to drink, smoke, gamble, and fight. Why not invest in vice?

Vice Fund Manager, Dan Ahrens focuses on "sin stocks"- tobacco, alcohol, adult entertainment, gambling, and aerospace/defense, contending that even during an abysmal economy, people will continue to indulge in these goods and services."

-Investing in Vice: The Recession-Proof Portfolio of Booze, Bets, Bombs & Butts
http://www.amazon.com/Investing-Vice-Recession-Pro...

7/29/11

The artcile about Kavanaugh was very interesting. I've never heard of the guy, but apparently he's a huge deal with an amazing-sounding career

7/29/11
7/29/11

It's clearly the prison industry. There's been substantial growth in the construction of private correctional facilities.

7/30/11

The points go to Rafiki. Was actually talking about the scene from The Sopranos when Silvio says that "historically the only two recession proof industries are certain elements of the movie business and our thing". This was, of course, back when internet porn was profitable.

7/30/11

I had just watched that episode, that's the only reason it came to mind, Of course it didn't fit with some other parts of the show because during some boom-times they were talking about everyone getting betting in on sports betting, indicating a cyclical nature to their occupation. Anyways, I'm over analyzing non-plot conversations, thank you for the banana!

7/31/11

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8/1/11

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