May 25 – Cannes, the world’s most prestigious film festival, is drawing investment by hedge funds and private- equity companies in motion-picture financing, production and distribution.

Film production companies said the money is transforming the way some movies are being made and sold, with hedge-fund managers becoming piggy banks for the industry. Since 2005, funds and private-equity investors have committed at least $4.5 billion to films, betting that the box-office returns can beat other investments.

`There is an influx of capital into the market, and that’s driven mostly by hedge funds,” said Daniel Miller, a partner at Screen Capital International, a Los Angeles-based finance company for TV and filmmakers. “A number of U.S. and European hedge funds have gotten interested in film.”

Miller, in an interview at Cannes, said the increased capital meant that “any producer who can pull together just the equity portion of their budget, which is usually 20 percent, 10 to 20 percent, is able to get the rest of it pretty quickly.”

`Both at studio level and independent level you have so much capital available,” said David Mollner, managing director at Screen Capital International. He said a lot of money “ is being deployed in new ways in the media, and one of them is to try and grab the power in the production, financing and distribution of motion pictures.”

Rows of Yachts

Banks and investment firms share moorings with film companies on the luxury yachts lined up at the festival. About 10,000 buyers and sellers hustle for a deal along the Croisette, the French city’s main drag: There are 4,000 films taking part – -10 percent more than last year — and 1,500 screenings across town.

William Pfeiffer, chief executive of Celestial Pictures, which has offices in Hong Kong and Beijing, said Asian films are doing well in attracting funding. “Now I think that those films are doing so well on a consistent basis, that private-equity money is starting to come out to Asia.”

Vivek Sharma, marketing director at Future Capital Partners, a structured asset-finance company, said in Cannes that the investors also get “a taste of the industry, the magic, the dream, as it were, that they invested in.”

Bill Gottleib, of Burbank, California-based Gorilla Pictures, said Cannes has become “much more of a signing festival or market than it was in the past, and it’s a good market for us.”

To contact the reporter on this story:
Mark Beech in London at mbeech@bloomberg.net .



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