The traditional approach of the asset portfolio allocation is evolving.
New alternative investments are selected while there is a strong demand for new opportunities in some specific sectors such as impact investment funds, real estate, luxury and/or fine art or wine, cryptocurrencies.
Any advisors and/or wealth managers want to improve the mitigation of their client’s portfolios’ risk by selecting the right investment opportunity based on the investment strategy of the financial institution and the management agreement authorization given by their client on a case-by-case basis.
Media and communication sector may be classified among one of these alternative investments, in particular, anything related to the film and/or audio-visual financing.
The Film financing area, here is such a funny phenomenon from the perspective of the investment industry. Many decades of bad reputation; many difficulties to find a good match between unclear producers’ goals and investors wishes unless film projects become hits.
What is true is that returns expectations may vary on a case-to-case basis and in most of the cases the reality is quite a bit different from a film industry perspective which means producers allow much more importance to the “Film credits” and/or a solid reputation and not especially to strong returns as their business model is always difficult to be truly predictable.
Of course, the need to realize strong investment gains is always an end in itself to demonstrate the trustworthiness of the investment partnership. However, in this industry the quality and reliability of the investment management must be the top priority of the producer.
But let’s take an end to these discussions and back to the beginning.
Most of the time the film financing industry is not considered by any wealth manager as a good investment opportunity if we look at the chances of success during the last 50 years.
Even in the 1930s, William Fox and his Fox Film Corporation and/or Adolph Zukor and his Paramount company endured the bitterest contests for power.
How should we consider the valuation of such an investment and its potential yield?
There’re two conflicting concepts here. The first one is about creative work and the second one about financial work.
Wylie Sypher, studying the development of twentieth-century arts, has concluded: “By the Cinema, he did not mean commercial motion pictures, where the camera is used “merely to record a nineteenth-century plot”, but rather “an artistic technique of presenting things as they exist in time by means of a composite perspective.”
Perhaps the most succinct statement of this view was made by Bernard Shaw in 1924. “All industries”, Shaw said, “are brought under the control of businessmen by Capitalism. If the capitalists let themselves be seduced from their pursuit of profits to the enchantments of art, they would be bankrupt before they knew where they were. You cannot combine the pursuit of money with the pursuit of art.”
A Hollywood publicist brilliantly reversed this condemnation and reworked it into a famous bon mot attributed to Shaw when he refused a contract offer from Samuel Goldwyn: “The trouble, Mr. Goldwyn, is that you are only interested in art, and I am only interested in money.”
The question is still not settled. Whether art can be created in a setting where maximum profit is the primary goal remains an issue throughout the mass-entertainment industries.
Adrien is the the Chief Executive Officer of World Oak Pictures, LLC. He has the practical experience necessary to discuss the many aspects of film and entertainment industry. He will be delighted to give a 30 minutes free Q&A interview to deal with any specific question you may have.
Send an email to [email protected] to book an appointment.