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Paramount Strikes $300m Film Finance Deal with Dresdner Kleinwort

Strategic Insights

— 1 min read

Paramount's messy separation from Tom Cruise seemed to be put behind it yesterday when the studio and its Viacom subsidiary announced a $300 million film finance deal with Dresdner Kleinwort to produce 30 films. The deal represents a vote of confidence in Brad Grey, Paramount's chief executive, and comes weeks after Sumner Redstone, Viacom's chief executive, fired Mr. Cruise. Investors have shown no signs of wavering, with Laura Fazio, managing director and head of media, global banking at Dresdner Kleinwort, stating that the deal demonstrates a strong investor appetite for the film sector and Paramount's appeal to investors.

Key Takeaways:

  • Paramount and its subsidiaries (Paramount Pictures, DreamWorks SKG, MTV Films, and Nick Movies) will produce 30 films under the deal, which was valued at $300 million.
  • The films will be funded by a pool of investors brought together by Dresdner, who will invest in the Melrose 2 fund to develop the slate of films.
  • Upcoming 2007 releases funded under the deal include Freedom Writers and The Spiderwick Chronicles.
  • The deal has also funded films from the 2006 Paramount slate, including Jackass: Number Two, World Trade Center, and Nacho Libre.
  • Mark Badagliacca, Paramount's chief financial officer, stated that partnering with investors on these films allows the studio to have more "swings of the bat" and is a smart move from a return on capital standpoint.
  • Laura Fazio, managing director and head of media, global banking at Dresdner Kleinwort, noted that a broader slate of films offers investors a better chance of making good returns and that there has been "resounding interest" in the Paramount films.
  • The deal is not the only financing arrangement struck between a studio and investors, as Sony Pictures and Universal have raised $700m from hedge fund investors, while Dune Capital Management has a $350m investment at 20th Century Fox.

Statistics:

  • $300 million: The value of the film finance deal struck between Paramount and Dresdner Kleinwort.
  • 30: The number of films to be produced under the deal.
  • $700m: The amount raised by Sony Pictures and Universal from hedge fund investors in a separate deal.
  • $350m: The investment made by Dune Capital Management at 20th Century Fox.

Sources:

  • Los Angeles Times (no date provided)
  • Brad Grey (Paramount's chief executive)
  • Laura Fazio (managing director and head of media, global banking at Dresdner Kleinwort)
  • Mark Badagliacca (chief financial officer at Paramount)
  • Sumner Redstone (Viacom's chief executive)
  • George Soros (former owner of Dune Capital Management)

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