Movie Industry, Riding Boom, Is Glamorous Gamble for Bankers; Growing Roster of Larger Banks Signing Up to Offer Financing for the Production of Films

The last several years have seen "an exponential growth in the banking/film business," according to Malcolm A. Birnbaum, president of United Film Productions and a former vice president in Chemical Bank's entertainment group.

This unprecedented boom is manifested by the more than $1 billion yearly trade surplus produced by the U.S. film and television industry, including a trade surplus with Japan.

Chemical, Bank of America, First National Bank of Boston, and Bank of California are among the U.S. banks active in the film industry. Overseas, the ranks include Britain's Barclays Bank PLC and the Credit Commerciale de France.

"It's an exciting business, a big, money-making business," said Lord Lew Grade, chief executive officer of Embassy communications International and founder of ATV, Britain's independent television network.

"You cannot fail to make money. The [film] negatives alone are worth their weight in gold, especially now, with all of the ancillary rights." Ancillary rights include home videotapes, network and pay TV, novelizations, merchandising, and foreign rights.

The strength of the American movie industry is evidenced by the number of film starts so far in 1984; the numbers are running 24% ahead of 1983 and 64% ahead of 1982. And even with the strong U.S. dollar, which yields less in remittals, 1983 worldwide theater rentals for the nine major studios were up 3.3% over 1982. Home video and pay TV also have contributed several hundred million dollars to the film industry.

However, this rosy profit picture is not necessarily a guarantee of making money in the film industry. "Movie-making is the most inconsistent of all the arts," Jack Valenti, president of the Motion Picture Association of American Inc., said recently. "A good movie cannot be defined or predicted."

Adding to this unpredictability is the fact that the cost of an average movie is $12 million. A film generallyz must gross three times its cost to …

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Movie Industry, Riding Boom, Is Glamorous Gamble for Bankers; Growing Roster of Larger Banks Signing Up to Offer Financing for the Production of Films. Contributors: Not available. Magazine title: American Banker. Volume: 149. Publication date: August 3, 1984. Page number: 12+. © 2009 SourceMedia, Inc. COPYRIGHT 1984 Gale Group.

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