Chapter 61: Investment Funds

The inauguration of California's new governor, Arnold Schwarzenegger, had a significant impact not just in California but across the entire United States.

Such big news about a screen tough guy leaving the entertainment industry to enter politics wouldn't die down quickly.

However, at the company, Charles was focusing on another piece of news. Isaac Palmer, the Vice President of Commercial Operations at Paramount Pictures, had spearheaded a movie investment fund in cooperation with Merrill Lynch.

Named the Melrose Fund, it raised over 100 million dollars to invest in 25 Paramount films over three years, covering an 18% share.

Paramount would first take a 10% box office cut as a distribution fee for each movie, and the remaining proceeds would be split with investors.

"Henry, what do you think?" Charles asked Henry Winston, who was sitting next to him.

"According to various bank data, hedge fund returns generally range between 10% and 18%, and the return rate of major Hollywood film companies has also reached about 15%. Merrill Lynch's fund this time is investing in multiple movies, which helps spread the risk!" Henry explained.

Charles nodded and smiled. "The publicly announced movies include Tom Cruise's Mission: Impossible 2 and War of the Worlds with Steven Spielberg and Tom Cruise, which certainly gives the fund's private investors and institutions confidence. Wall Street is shifting from single-film investments to multiple-film risk-spreading investments."

"Charles, do you have any thoughts?" Henry Winston asked.

"This kind of mixed investment is only suitable for big Hollywood distributors. As for us..." Charles shook his head, thinking about how many movies his company could produce in a year.

Moreover, he had absolute confidence in his films; getting a bank loan directly was sufficient.

Wall Street was forming film funds, attracting capital from private and institutional investors, and then partnering with major Hollywood distributors to invest in multiple films, with the investment ratio determined by the strength of their negotiations.

As for the film lists, one side would definitely want established IP sequels or forward-looking projects, while the other side would want to include more undervalued projects.

It was a game between the two sides!

Legendary Entertainment and Relativity Media seemed poised to bring large sums of money into Hollywood soon.

"Is the director for Wedding Crashers confirmed?" Charles asked.

"David Dobkin, the director of Shanghai Knights. He has the script," Henry Winston replied.

"The comedy film directed by the one who worked with Jackie Chan and Owen Wilson this year?" Charles glanced at the information - comedy director.

Shanghai Knights, was a sequel to the 2000 action-comedy film Shanghai Noon.

"He thinks Owen Wilson is good and can be one of the male leads," Henry continued.

Charles nodded and said, "For the female lead, let's use Scarlett Johansson. She's beautiful. The other actress can be Isla Fisher. Let's have the director call them in for auditions."

Henry Winston nodded. In a romantic comedy, having a beautiful female lead was paramount; the rest wasn't as crucial.

"Charles, what about Universal?" Henry asked.

"Ignore them. Just start the preparation. Universal will understand soon enough," Charles said, confident that after Saw was released, they wouldn't doubt his judgment anymore.

Vivendi was in talks with General Electric about acquiring Universal Entertainment, possibly reducing their attention to Universal Pictures' projects.

After Henry Winston left, Charles called Dona Williams in.

"Contact Morgan Stanley's Film and Entertainment Division. I want to use the rights to Brokeback Mountain as collateral for a 15 million dollar loan," Charles instructed.

Dona Williams nodded. With the current favorable economic situation and the Federal Reserve's ongoing interest rate cuts, securing a bank loan wasn't difficult.

Aside from the distribution contract with Focus Features, Brokeback Mountain had a production budget of 15 million dollars.

Carpe Productions also had Saw ready for release, so there were no concerns about Carpe Productions not being able to pay the interest or principal later.

The distribution contract for Brokeback Mountain alone could secure a 10 million dollar loan, and with the ongoing revenue from TV and DVD rights, it was a solid loan guarantee.

Wall Street's five major investment banks - Lehman Brothers, Morgan Stanley, Merrill Lynch, Goldman Sachs, and Bear Stearns - all had entertainment investment funds targeting Hollywood.

Additionally, JPMorgan Chase, Bank of America, Wells Fargo, Deutsche Bank, HSBC, Citigroup, Credit Suisse, Barclays, among others, constituting over 40 large international banks, also had entertainment investment departments.

Hollywood had always been inseparable from Wall Street.

Saw gained a lot of attention at the Toronto International Film Festival in September, receiving significant viewer recognition.

Rogue Pictures also planned a major public charity promotion called "Blood Drive."

Judging by the promotional strategy and scale, Saw's marketing was effective. Whether it was pre-screenings or special viewings, the word of mouth was good, backed by Universal's industry giant status.

Rogue Pictures had already indicated that many theaters were interested in showing Saw.

Eye-catching posters filled with savagery and gore promised a must-see event for Halloween.

In October, several low-budget horror-thriller movies were scheduled to release. Saw was set for the Friday before Halloween.

On the same day, Dimension Films would release Scary Movie 3. As Miramax's division specializing in horror-thriller B-movies, the Scary Movie and Scream series were their flagship franchises.

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