Persistence of Vision

Can Hollywood transcend the vagaries of the market? There's no time like the present to ask that question.

Writing for the New York Times, David Carr suggests that the answer may be "yes":

Hollywood comes by its indifference honestly. Certainly, the stock prices of the big media companies that own the film industry are getting pounded on the market along with the rest of us, and the canyons are no doubt full of little rivers of blood as individuals watch their net worth shrink.

But out there at the box office, it is still morning in America. Four major movies opened on Friday, and they came on the heels of seven movies the week before, most of which did quite nicely, thank you. The fact that "Beverly Hills Chihuahua" has topped the box office for two weeks running and has taken in over $52 million may be one of the signs of the apocalypse, but not the kind that has anything to do with credit default swaps.

"It's times like these that some of those jokes about the people in Los Angeles seem valid," said Peter Bart, the editor in chief of Variety. "There has always been the suggestion that this city is not acutely conscious of what is going on in the rest of the world, and this is one of the times when it lives up to the reputation. There are many people here who don't read a lot and because of that are less obsessed by what is happening back in New York."

Spend any time here, and you will soon learn that Hollywood lives by its own clock. Because movies are generally large endeavors that take time to come together, they reflect things that were happening three years ago while the studios' capital outlays speculate on the needs of the market three years hence.

After taking a big hit during the Depression, the Hollywood box office came back strong--and this time could be no different. The consumer might consider a night of watching the serial disaster movie on CNBC or CNN, or decide to head to the movies instead, which is why the people who finance Hollywood continue to make large bets that people will still go to the movies.

In the last few weeks, billions--not from the federal government, but from actual banks--are being invested even as brokers back East stare into the abyss of their trading terminals.

Reuters reported last Thursday that JPMorgan Chase--one of the industry's go-to financiers--knocked out three big deals, including a venture between the Reliance ADA Group of India and Steven Spielberg's DreamWorks SKG. The bank has already put up $125 million--and $600 million more from other lenders is on hold for the moment, but there's no reason to think the deal won't go through.

JPMorgan also wrapped up a $350 million deal for Media Rights Capital, the company that is making the latest Cameron Diaz movie and was the leader in gathering the $1 billion to finance the digital upgrade of 20,000 movie theaters to help increase the capacity to show 3-D films.

There is enormous pent-up demand for films that will be ready in 2009 and 2010 because the writers' strike held up production and then the threat of an actors' strike pinched schedules. But the industry seems to have collectively decided that actors won't risk a strike during a huge economic headwind. Approximately 50 movies from the various studios have received some sort of approval and will enter production soon, according to Variety.

And that's a wrap.